D-Street gives thumbs down to Reliance Industries

shares Reliance Industries It fell 2 percent on Monday as its first-quarter performance disappointed traders even as analysts were divided. Most analysts see only limited upside for the stock from current levels. The stock closed the day at $2487.40 on the NSE.

After market hours on Friday, Reliance reported an 11 per cent drop in net profit for the June quarter at ₹16,011 crore as against ₹17,955 crore in the corresponding quarter of the previous year.

consumer power

According to Jefferies, sustainable competitive advantage on economies of scale, cost leadership, financial strength FCF has invested in consumer business ₹9 crore in equity value, new growth drivers with large addressable markets – digital in Jio, e-commerce in RR, COTC in O2C and new energy business are the rationale behind the investment.

In fact, Jefferies increased the price target to $3,100, from $3,060 the stock is trading close to a bear condition assessment and offers a decent return to risk.

On the other hand, Systematix cut its price target to ₹2,550 from an earlier ₹2,766 largely reflecting the exclusion of Jio Financial Services (JFSL). The brokerage said, “We downgraded the stock to hold from the previous buy due to the limited upside after the recent rally.”

As assessed by Motilal Oswal, the company’s consumer business was a mixed bag with retail seeing moderate growth but likely to see gains from its future group footprint.

Soften contacts

Growth in telecoms will continue to moderate with a higher base and less likelihood of tariff increases in the near term as well as ramping up spending on 5G networks. While upstream production is expected to rise to 30 mm3 in the coming months from 20.9 mm3 on the first day of Q1 FY24, there are still concerns about future refining and petrochemical margins.”

Noting that the consumer electronics business has been growing steadily, research analysts at B&K Securities said the growth momentum was driven by improved conversions and an improved average invoice value (ABV). “We were working on EBITDA from Oil to Chemicals (O2C) to decline 22 percent q-o-q and were therefore positively surprised by the relatively strong performance (down only 6 percent q-o-q). Other key segments such as Telecom, Retail and Oil & Gas reported largely in line with our expectations.

In addition, the media business of Reliance Industries recorded total revenue of INR 3,790 crore for the first quarter of FY24, up by 143.3 percent year-on-year. Its revenue growth of 141.7 percent was driven by Viacom18, whose IPL on JioCinema generated record advertising revenue.

BNP Paribas, which raised its price target to ₹2,925 from ₹2,800, said, “Our EBITDA estimate upgrades are primarily driven by the O&G department. We have also raised interest and amortization assumptions, which has resulted in a slight decrease in earnings estimates.”