Mumbai (Maharashtra) [India] December 17 : Global brokerage Morgan Stanley has re-rated Reliance Industries Ltd (RIL), citing the onset of what it calls the company's "fourth monetisation cycle" and a decisive inflection in cash flows across all major business verticals.
In its report titled "Monetisation 4.0", Morgan Stanley noted that, "Since Covid, RIL has invested >US$80bn - all of it should start to bear fruit from 2026." The brokerage highlighted that for the first time, RIL's energy, consumer and telecom businesses are expected to turn free-cash-flow (FCF) positive simultaneously, which it believes is a structural trigger for a valuation re-rating.
According to the report, "This is RIL's fourth monetisation cycle in 30 years - with energy, consumer and telecom investments all turning FCF-positive for the first time - leading to a re-rating, in our view." Morgan Stanley also noted that RIL has historically outperformed the benchmark during similar phases, stating that the stock "outperformed the Sensex by ~35ppt in the last two monetisation cycles, 2017-2019 and 2020-2021."
A key driver behind the re-rating thesis is the strength of RIL's refining business. Morgan Stanley described fuel refining as RIL's most underappreciated vertical and said the sector is currently witnessing a golden age for refining.
The report added, "RIL's fuel refining margins are tracking near US$14/bbl (including fuel retail) - i.e., ~1.5x above mid-cycle levels as this golden age rolls into its fourth year in 2026." The brokerage estimates this phase could create USD7-10bn in NAV.
Telecom is another major pillar of the re-rating call. Morgan Stanley said Jio is turning into a cash-generating business as capital intensity declines. It expects "ARPU to rise at a 9% CAGR in F26e-F28e", supported by broadband outperformance, subscriber upgrades from 4G to 5G and the rollout of AI-led offerings such as Gemini 3 AI. The report noted that telecom should add a further boost to FCF as capital intensity halves.
Retail growth and chemicals recovery are also seen as sequential catalysts through FY26. Morgan Stanley said, "We expect a re-rating and earnings upgrades to be triggered in every quarter of 2026," led by refining in Q1, telecom and retail growth in Q2, new energy ramp-up in Q3 and improving chemicals sentiment in Q4. On chemicals, the report pointed to "anti-involution in China" and capacity shutdowns, which it believes mark "the bottom of the petrochemical cycle."
The brokerage also flagged optional upside from new growth areas. It said RIL is redeploying surplus cash into AI infrastructure, energy storage, and polysilicon, while balance-sheet strength improves as spectrum and creditor liabilities unwind. Morgan Stanley added that "underwriting of RIL's AI data center capacity by US hyperscalers should increase confidence in NAV accretion from AI investment."
Summing up its view, the report said, "Three building blocks, US$50bn in value creation, and catalysts each quarter make us more bullish for 2026," and advised investors to "own this fourth monetisation cycle." The brokerage raised RIL's price target to Rs 1,847.
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