Reliance Industries Q1: Reliance Industries (RIL), the oil-to-telecom conglomerate, as anticipated by the analysts, reported soft numbers for the June quarter of the current fiscal year (Q1FY24), owing to weakness in the oil-to-chemicals (O2C) business. However, its retail arm, Reliance Retail, fired on all cylinders. The telecom unit, Reliance Jio Infocomm, too posted a decent set of numbers.

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In the early morning deals on Monday, the stock was trading over 2 per cent lower at Rs 2476.95 on the BSE.

The consensus view on the long-term growth story of the Mukesh Ambani-led company remains intact, but in the short term, the stock is expected to remain under pressure. In fact, technical analysts expect the stock to decline to Rs 2,480–Rs 2,460 and below that to Rs 2,350–Rs 2,340. Analysts believe that the upcoming annual general meeting (AGM) of the company could give more visibility regarding the stock price.

TECH VIEW

Prashanth Tapse, Sr VP Research Analyst at Mehta Equities, says, "RIL Q1 Results missed street estimates due to weak performance in the oil-to-chemicals (O2C) business on account of a sharp reduction in crude oil prices and lower price realisation of downstream products. While double-digit growth in segments like retail and digital services helped RIL report stable growth. As per our readings, the results are neutral to negative."

"Technically, the price is in a broad trading range of Rs 2,850–Rs 2,350. The price closed lower on Friday, one day after the demerger. The short-term trend is down. What we can expect is a decline to Rs 2,480–Rs 2,460 and below that to Rs 2,350–Rs 2,340. The easiest way to trade Reliance is to buy or accumulate around Rs 2,370–Rs 2,340. The price could remain in this wide trading range of Rs 2,850–Rs 2,350 for a prolonged period of time. For the long term, we would continue to remain optimistic post-results," the analyst added.

Shrikant Chouhan, Head of Research (Retail), Kotak Securities, agrees. "Reliance Industries is technically correcting from the highs after the demerger of the business. It could fall to Rs 2,470 and Rs 2,430 in the worst-case scenario, while resistance would be at Rs 2,530 and Rs 2,590," Chouhan added.

What global brokerages say

Global brokerage Citi has maintained a "Neutral" rating on the stock with a target price of Rs 2,750. In its earnings review note, the brokerage said that RIL's Q1FY24 consolidated EBITDA was down 1 per cent QoQ, which was broadly in line with estimates; however, O2C EBITDA was slightly below. Meanwhile, Oil and Gas were ahead, and Jio and Retail were in line. The brokerage added that key segments have a soft near-term outlook, which could preclude earnings upgrades. 

It must be noted that the oil-to-chemicals (O2C) segment accounts for around 60 per cent share of its revenue and earnings. Further, the company added that it expects downstream petchem margins to remain capped in the near term due to new supply from China.

Gas prices are expected to remain volatile in CY23 due to demand uncertainties in Europe and Asia. Higher EU storage levels coupled with high nuclear outputs from Japan and France may dampen demand. Conversely, weather-related variations and the high probability of El Nino may create winter demand in Northern Europe. Demand recovery is also likely in China in 2HCY23, aided by the new policy.

RIL demerges financial arm

Last week, the domestic stock exchanges, NSE and BSE, conducted a one-hour special session for RIL to discover the price of its demerged entity, Jio Financial Services, which is expected to list on the bourses in the next 2-3 months. Jio Financial Services (JFS) has been valued at around $20 billion after its stock price was set at a much higher-than-expected Rs 261.85 ($3.19) in its demerger from RIL.

RIL Q1 results

Reliance Industries Ltd reported on Friday an 11 per cent drop in its June quarter net profit on account of weakness in the mainstay oil-to-chemical (O2C) business as well as higher finance and depreciation costs. The oil-to-retail-to-telecom conglomerate's consolidated net profit was at Rs 16,011 crore, or Rs 23.66 per share, in April-June - the first quarter of the current 2023–24 fiscal year, compared with Rs 17,955 crore, or Rs 26.54 per share, earning a year ago, according to a company's statement.

The net profit was also lower quarter-on-quarter when compared with record earnings of Rs 19,299 crore in the preceding three months ended March 31. After outlier record global cracks on diesel, petrol, and jet fuel (ATF) in April-June 2022, margins have shrunk to near-normal levels this year, hurting the earnings of refiners such as Reliance. READ MORE

Reliance Jio Q1 results 

Reliance Jio Infocomm, the telecom arm of Reliance Industries (RIL), on Friday, reported over 12 per cent rise in net profit to Rs 4,863 crore in the June 2023 quarter, the company said in a filing. The company posted a net profit of Rs 4,335 crore in the same period a year ago. READ MORE

Reliance Retail Q1 results 

Reliance Retail on Friday reported a 19 per cent rise in consolidated net profit to Rs 2,448 crore in the first quarter ended June 2023, led by growth in grocery, consumer electronics, fashion, and lifestyle categories. The company, a part of billionaire Mukesh Ambani-led Reliance Industries Ltd.,  posted a consolidated net profit of Rs 2,061 crore in the same quarter of the last fiscal. READ MORE