Reliance stock tanks over 7% post earnings to lowest in 3 months — here's what brokerages are saying

Reliance stock tanks over 7% post earnings to lowest in 3 months — here's what brokerages are saying
  • The shares of Mukesh Ambani-owned Reliance Industries (RIL) touched a three-month low of ₹1,910 on Monday.
  • This decline comes post its second-quarter earnings on October 30, where it recorded a 32.5% year-on-year decline in its standalone net profit along with the overall revenue dipping 32.7%.
  • Brokerages have shown mixed sentiments towards RIL share price stock after the oil-to-telecom behemoth posted its quarterly result.
The shares of Mukesh Ambani-owned Reliance Industries (RIL), India's most-valued company, tanked 7% during trade on Monday, touching a three-month low of ₹1,910 at 1:00 pm.

This decline comes post its second-quarter earnings on October 30, where it recorded a 32.5% year-on-year decline in its standalone net profit along with the overall revenue dipping 32.7%. The revenue from nearly all its segments from petrochemicals to refining contracted during the quarter.

Reliance stock tanks over 7% post earnings to lowest in 3 months — here's what brokerages are saying

Brokerages have mixed views on RIL
Advertisement

Brokerages have shown mixed sentiments towards RIL share price stock after the oil-to-telecom behemoth posted its quarterly result.

BrokerageRecommendationTarget Price
MacquarieUnderperform₹1,195
Edelweiss SecuritiesHold₹2,105
Emkay Global Financial ServicesHold₹1,970
Motilal OswalBuy₹2,240
Prabhudas LiladherBuy₹2,055
BOB CapitalReduce₹2,000
Goldman SachsBuy₹2,330
Axis CapitalAdd₹2,220

Why are brokerages cautious?

Petchem business to remain muted

According to BOB Capital, RIL’s forthcoming earnings are going to remain a drag. The Refining and petrochemicals, which together make for over three-fourth of the company’s revenue took a major hit in the September quarter. And, post the resurgence of coronavirus in Europe, the global oil demand recovery has seen disruptions.
Advertisement


SegmentRevenue segments in Q2
Petrochemicals₹ 29,147 crore
Digital Services₹267 crore
Oil and Gas₹72 crore
Retail₹38 crore
Financial Services₹326 crore
Others₹304 crore
Refining₹49,859 crore

In the second quarter, the gross refining margin (GRM) fell to $5.7 a barrel compared to $6.3 a barrel just three months ago. And, BOB Capital noted that RIL’s valuations are highly sensitive to GRM and petrochemical crack movements. But it also noted that “Better-than-expected recovery in global economies can raise these spreads and alter our valuation outlook.”

Reliance stock tanks over 7% post earnings to lowest in 3 months — here's what brokerages are saying

The Prabhudas Lilladher report dated October 31 said, “We lower our FY21 standalone earnings by 21% to factor in weak H1 performance. We also change our FY22-23E estimates to factor lower refining and petrochemical spreads and make changes in finance and depreciation charges.”

Advertisement
SEE ALSO: Hero Motocorp shares gain after it logs ‘highest-ever’ sales in October

Former HDFC Bank CEO Aditya Puri joins Carlyle Group — will advise the global investment firm on Asia bets
{{}}