Reliance Ind down 4%, hits over nine-month low; slips 20% from 52-week high

Reliance Industries (RIL) shares hit an over nine-month low of Rs 1,289, as they slipped 4 per cent on the BSE in Monday’s intra-day trade amid heavy volumes. The stock price of the country’s most valued company in terms of market capitalisation is trading at its lowest level since January 10, 2024. It has corrected 20 per cent from its 52-week high level of Rs 1,608.95 (adjusted to 1:1 bonus) touched on July 8.

 

In one month, RIL has underperformed the market by falling 7 per cent, as the company reported muted earnings for the quarter ended September 2024. In comparison, the BSE Sensex was down 3.9 per cent during the same period.

 

RIL’s consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) stood at Rs 86,682 crore for the six months ended September 2024 as compared to Rs 86,715 crore in the corresponding period of the previous fiscal.  The consolidated operating and financial performance of the company remained stable in the first six months of fiscal 2025. Revenue growth was healthy at 6 per cent while operating profitability remained stable against the same comparative period for the previous fiscal. 

 

However, the operating profitability in the company's oil to chemical (O2C) segment has seen moderation, wherein margins have weakened owing to product cracks falling sharply due to increased supply of products and lower global demand.  Further, the growth for retail segment was muted due to a weak demand, particularly in the Fashion & Lifestyle segment, CRISIL Rating said.

 

RIL’s O2C business is likely to remain under pressure for the remainder of the current financial year, according to analysts and company executives. “Management guides for softness for the next couple of quarters in both retail and O2C businesses,” analysts at BOB Capital Markets noted in an after-results report on RIL.

 

Factoring in Q2 results, particularly the decline in margins in O2C segment and likely slower growth in Retail business for another couple of quarters, the brokerage firm said it has lowered its Ebitda estimates for FY25 by 2.9 per cent and FY26 by 2.3 per cent.

 

The aggressive growth plans, coupled with proven execution capabilities create an enabling environment for strong EPS growth over the next 5–7 years, underpinning Chairman Mukesh Ambani’s vision to grow the business 2x by FY28, analysts said. 

 

ICICI Securities, in the company's results update, said it has modeled steady growth across segments in its current estimates, with EPS CAGR at 14.2 per cent over FY25–27E.  The brokerage firm’s cautious stance, however, remains unchanged given the potential for aggressive 'New Energy' capex beyond the currently announced Rs 75,000 crore and continued expansion of Retail/JIO infra, implying that FCF yield/RoCE improvement will likely remain back ended.