Reliance Industries Limited (RIL) shares jumped more than 2% during the trading session on September 1, as reported by Business Upturn. The stock was among the top gainers, touching an intraday high of ₹1,311.80 as of 11:54 AM. Jefferies has maintained its 'Buy' rating on RIL shares and marginally raised the target price to ₹1,710 from ₹1,705, implying an upside potential of approximately 32.1% against the brokerage's reference price of ₹1,294.90. The stock opened at ₹1,285, compared with its previous closing price of ₹1,277, and recorded an intraday low of ₹1,280. The index heavyweight contributed to the market's positive momentum, with Reliance Industries recording a trading volume of 76,08,147 shares during the session.
According to Jefferies, conflicts have led to the loss of approximately 4% of global refinery throughput, with the Middle East alone experiencing refinery run cuts of around 2.5 million barrels per day since the conflict began. The disruptions are split between 1.5 million barrels per day linked to the Strait of Hormuz blockade and another 1 million barrels per day due to physical damage. Russia has also faced around 1.5 million barrels per day of refinery run cuts over the past year due to rising damage to its refining infrastructure. European diesel inventories and US gasoline inventories have fallen to five-year lows, with diesel and gasoline cracks climbing sharply to $70 per barrel and $47.3 per barrel respectively. As per Jefferies, some severely damaged Middle Eastern refineries could require four to six months for repairs, while Russian refinery outages could continue depending on attack intensity. Singapore gross refining margin, which serves as a benchmark for Asian refining margins, is now near a record high, reflecting the tightening conditions in the global refining market.
The brokerage highlighted that Singapore Gross Refining Margin (GRM) averaged $21.2 per barrel in the second quarter of FY27 to date, a key indicator of refining profitability in Asia. Jefferies estimates average petrochemical margins across polyethylene (PE), polypropylene (PP) and polyethylene terephthalate (PET) are up 64% in the second quarter of FY27 to date compared with the end of February. The strength comes from two major petrochemical facilities in Iran and two large facilities in Saudi Arabia suffering damage, along with disrupted Middle Eastern naphtha exports to North-East Asia. The key advantage for RIL is that its SEZ refinery, which accounts for the majority of its refining capacity, is spared from windfall taxes and should benefit more significantly from the ongoing refining strength. Reliance Industries is also among the world's largest and most complex refiners, allowing it to process cheaper, heavier grades of crude oil, providing an advantage when refined-product margins remain strong.
As reported by Jefferies, the brokerage expects consolidated EBITDA to grow at a 10% CAGR between FY26-29, with the supply tightness expected to persist through calendar year 2026. The firm noted that petrochemical spreads have remained firm, with average petchem margins up 64% in Q2FY27 vs February-end, aiding Reliance's O2C profitability. Oil-to-chemicals remains the largest contributor to Reliance Industries' earnings, and sustained strength in refining margins could directly support the segment's financial performance. The brokerage expects the company to record a 10% compound annual growth rate in EBITDA between FY26 and FY29. The disruption may not disappear quickly, with some severely damaged Middle Eastern refineries requiring extended repair periods. Beyond O2C, Jefferies expects recovery in Reliance Retail's growth could support the stock's re-rating, with 'strong earnings delivery and a recovery in Retail growth to mid-teens could re-rate the stock'. If the recovery in GRMs/petrochemical margins beats estimates and Reliance Retail gains market share faster than expected, RIL stock has the potential to reach levels of ₹1,900 in the upside scenario.
