Equity Research and Fundamental Analysis of Reliance Industries Limited: Financial Performance, DCF Valuation and Portfolio Relevance for the ABSLI Maximizer ULIP Fund (International Journal of Creative and Open Research in Engineering and Management)

Summary

• Revenue from operations increased from ₹7,17,635 crore in FY2022 to ₹10,75,675 crore in FY2026, an approximate 10.6% five-year CAGR.p.5
• Operating cash flow increased from ₹1,10,654 crore to ₹1,92,113 crore, an approximate 14.8% CAGR.p.6
• Total assets rose from ₹14.97 lakh crore to ₹21.78 lakh crore between FY2022 and FY2026.p.6
• EBITDA margin improved from 15.5% to 16.6%, ROE from 7.6% to 9.1%, and ROCE from 7.3% to 9.5%.p.7
• The base-case DCF gives an intrinsic value of ₹1,080.30 per share against an assumed market price of ₹1,275.90, an implied downside of 15.3%.p.9
• Using a WACC of 10.6% and terminal growth of 5.0%, enterprise value is estimated at approximately ₹16.90 lakh crore.p.11

Key insights

1. Debt-to-equity remained moderate at 0.34x in FY2026.p.7
2. The cash-conversion ratio remained above 1.0x throughout the period and reached 2.01x in FY2026.p.7
3. Cash and cash equivalents grew from ₹36,178 crore to ₹1,45,977 crore, while capital work-in-progress rose from ₹68,052 crore to ₹1,92,287 crore.p.6
4. The DCF model forecasts FCFF increasing from approximately ₹70,707 crore in FY2026 to ₹1,18,388 crore in FY2031.p.9
5. Valuation is highly dependent on WACC and terminal growth: about ₹1,404 per share at 9.5% WACC and 5% growth, but about ₹913 at 11.5% WACC and 5% growth.p.9
6. The valuation view in the report is HOLD / UNDERWEIGHT, which is valuation-led rather than a statement that the business is weak.p.9
7. The study stresses that high capital intensity remains a key concern, as capital expenditure stayed large and capital work-in-progress increased substantially.p.10
8. The study notes that DCF valuation is highly sensitive to revenue growth, margins, WACC, terminal growth, capex and working capital.p.12