Reliance Industries fundamentals strong, some FMCG stocks offer 15-20% upside: Deven Choksey

Reliance Industries could clock earnings before interest, tax, depreciation, and amortisation (EBITDA) of ₹2.6-2.7 lakh crore in the current financial year, 2026-27 (FY27), driven by strong refining margins and the growing contribution of Jio Platforms, according to Deven Choksey, Managing Director at DRChoksey Finserv.

While the stock has made a swift technical move from ₹1,150 to ₹1,300, Choksey believes the fundamental case remains extremely convincing. The oil-to-chemical segment continues to deliver better refining margins, with diesel cracks remaining robust in the current quarter, including this month.

"So definitely the African export of diesel or the European export of diesel is adding significantly to the margin front, which one has not seen in Reliance's case in last so many years in this commodity business," Choksey said.

Further value is emerging from the digital and telecom business. With Jio Platforms up nearly 40% from its intial public offering (IPO) price, the sum-of-the-parts valuation is increasingly getting reflected in Reliance Industries' stock price.

Choksey also expects Jio Platforms to declare a dividend. He said the company generates free cash flows equivalent to a third of its revenue. With Reliance Industries holding around 64-66% of Jio Platforms, he expects this cash flow to translate into a significant contribution for the parent company's profits.

Shifting to market infrastructure institutions, the outlook for exchange stocks remains distinctly positive despite slightly subdued recent quarterly numbers from the National Stock Exchange (NSE). The recent volume impact in the cash segment justifies the softer performance, but long-term prospects are attractive as volume activity is expected to accelerate.

These businesses generate substantial free cash flows and benefit from increasing participation by large investors in the Indian market. Adding exchange stocks to a portfolio is recommended, especially with their upcoming weight in the new index.

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In the consumer goods space, the recent heavy sell-off across fast-moving consumer goods companies appears overdone. Following an 8% upward move in Marico, a broader recovery is due for severely battered stocks such as Hindustan Unilever (HUL), Nestle India, and ITC.

"I think these businesses are remaining absolutely convincing to me," Choksey explained, projecting that current valuations offer an interesting proposition for at least a 15-20% upside from their recent low levels.

Disclosure: Reliance Industries, the promoter of Jio, also controls Network18, the parent company of CNBCTV18.com.



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