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.
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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.
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Brokerages have mixed views on RIL
Brokerages have shown mixed sentiments towards RIL share price stock after the oil-to-telecom behemoth posted its quarterly result.
|Emkay Global Financial Services||Hold||₹1,970|
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.
|Segment||Revenue segments in Q2|
|Petrochemicals||₹ 29,147 crore|
|Digital Services||₹267 crore|
|Oil and Gas||₹72 crore|
|Financial Services||₹326 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.”
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.”
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