Shares of Reliance Industries Ltd (RIL) rose sharply on Thursday, gaining as much as 3%, after brokerages said the recent fall in the stock price was excessive and that the company could actually benefit from rising crude oil prices amid the ongoing Iran conflict and disruptions around the Strait of Hormuz.
The rise in Reliance shares comes after the broader market had seen a selloff due to rising tensions in the Middle East. Investors were worried that supply disruptions in the region could push crude oil prices higher and affect global markets.
However, analysts say that for Reliance, which runs one of the world’s largest refining and petrochemicals businesses, the situation could turn favourable.
WHY SUPPLY DISRUPTIONS MAY HELP RELIANCE
Brokerages said disruptions in the Middle East could tighten the supply of refined oil products globally. This could push refining margins higher, which directly benefits companies like Reliance that process crude oil into fuels such as diesel and petrol.
Analysts noted that diesel cracks, a key measure of refining profitability, have already surged to about $35–42 per barrel in recent days. Earlier, these margins were around $20 per barrel.
According to brokerage Jefferies, higher refining margins can significantly boost Reliance’s earnings.
“Every US$ 1/bbl higher refinery margin benefits Reliance’s Ebitda by US$ 500mn annualized (2% of consol Ebitda for FY27),” Jefferies said in a note.
The brokerage added that a blockade of the Strait of Hormuz could disrupt about 2–3 million barrels per day of refined product supply, which is roughly 2-3% of global demand. Such disruptions could push refining margins higher across the world.
Jefferies also said that any damage to Saudi Arabia’s Ras Tanura refinery could further disrupt supplies and support refining margins.
However, the brokerage cautioned that the benefit to Reliance will also depend on whether the Indian government decides to bring back windfall taxes on petrol and diesel.
RECENT FALL IN RELIANCE SHARES SEEN AS OVERDONE
JM Financial said the recent 8% decline in Reliance shares over the past month was excessive. The brokerage believes the company is unlikely to face major negative impact from rising crude oil and liquefied natural gas prices.
Instead, it expects the company to benefit in the near term due to higher diesel cracks and a possible rise in petrochemical margins.
“Assuming diesel crack sustains at ~USD30/bbl, RIL’s GRM could rise by USD 4-5/bbl. Every USD 1/bbl rise in RIL’s GRM on an annualised basis results in an increase in its annual EBITDA by INR 45bn or 2.2% and increase in valuation by INR 29/share of 1.7%,” JM Financial said.
GRM refers to gross refining margin, which shows how much profit refiners make from processing crude oil into fuels.
HIGH DIESEL OUTPUT COULD BOOST PROFITS
JM Financial pointed out that Reliance’s refinery has a high diesel yield of around 40-50%. This means a large share of the refinery’s output is diesel, allowing the company to benefit more when diesel margins rise.
However, the brokerage also said the unusually high diesel spreads may not last for long. It warned that the government could intervene by imposing windfall taxes if refining profits rise sharply.
A similar step was taken during the Russia-Ukraine crisis, when the government capped diesel and petrol cracks at about $20 per barrel.
PETROCHEMICAL BUSINESS MAY ALSO SEE MARGIN GAINS
Apart from refining, Reliance may also benefit in its petrochemicals business.
JM Financial said product prices in petrochemicals usually rise along with crude oil prices. At the same time, the cost of raw materials used by Reliance remains relatively stable.
This is because Reliance has limited dependence on crude-linked naphtha for its petrochemical feedstock. Around 25% of its feedstock comes from ethane, about 50% from off-gases, and only around 25% is linked to crude-based naphtha.
This mix could help the company expand margins when product prices increase.
VALUATION AND FUTURE TRIGGERS
JM Financial said that at the current market price, Reliance shares are trading close to its bear-case valuation of about Rs1,275 per share.
The brokerage has maintained its buy rating on the stock with an unchanged target price of Rs1,730.
It also said the recent fall in the stock was largely due to foreign institutional investor selling. FII holdings in Reliance declined to 21.1% at the end of December 2025, compared with a peak of 28.3% in March 2021.
According to the brokerage, current valuations already factor in the near-term weakness in Reliance’s retail business due to rising competition from quick commerce companies.
However, it believes the company’s digital business could deliver strong growth, with EBITDA expected to grow around 15–16% over the next 2–3 years.
At present, Reliance shares are trading at about 16.8 times its fiscal 2028 estimated price-to-earnings ratio. This is lower than its three-year average of 23.9 times.
The stock is also trading at about 8.2 times its fiscal 2028 estimated enterprise value-to-EBITDA, compared with a three-year average of 11.9 times.
Brokerages said there are also a few important triggers that could move the stock in the coming months. These include the expected initial public offering of Jio and a possible telecom tariff hike after the listing.
