Jefferies raised Reliance Industries’ share in its model portfolio to 7.5% on October 6, citing a forward EV/EBITDA of 8.4× that sits 23% below the company’s 10‑year average. The note highlighted potential earnings upgrades and a widening gross refining margin as catalysts for the move.
The analyst noted that the 8.4× multiple reflects a valuation discount that aligns with the broader large‑cap trend, where Indian stocks are trading 10% below their August peak. It also pointed to a 50% price discount on Kotak Mahindra Bank and a 3‑fold surge in Welspun Corp, both added to the portfolio at 2% and 2.4% weightages respectively.
Kotak’s inclusion follows the removal of a leadership overhang and a projected growth acceleration above 15%, while Welspun is positioned to benefit from a multi‑year up‑cycle in U.S. and West Asian oil‑and‑gas infrastructure spending. Both stocks are trading at 1.8× and 1.5× price‑to‑average book values, well below their 10‑year historical averages.
The broader backdrop shows MSCI India down 10% from its August peak, underperforming emerging markets by 14 percentage points. Jefferies attributes the underperformance to fears of higher rates, yet notes that the Indian yield gap with the U.S. sits at 20‑year lows and the inflation gap is narrowing.
With real rates still positive, Jefferies expects a shallow rate‑hike cycle, turning largecaps into attractive “hiding places”. The firm remains overweight on interest‑rate sensitive NBFCs, real estate, and Eicher Motors, but believes the valuation compression offers upside potential for Reliance as its margins expand.