Why did RIL's shares plummet despite analysts' positive projections?

Mumbai: Shares of Reliance Industries dropped over 3% on Monday as investors weighed the conglomerate's lower-than-expected Q1 earnings against analysts' positive outlook on stock after results. Stock ended at ₹1,428.6 on Monday, down 3.2%, capping gains in Sensex and Nifty, which ended 0.5% higher.

"Reliance shares had recently rallied on expectations of strong quarterly results and a potential IPO announcement for its telecom business," said Sumit Pokharna, VP, fundamental research, Kotak Securities. "But, the management's clarification the IPO is deferred to next year had earlier led to some correction, and combined with results below Street estimates, we saw some profit-booking." The stock has gone up about 17% so far this year, against Nifty's 5.7% gains. PAT in June quarter stood at ₹30,681 crore, up 36.8% from January-March. Its revenues from operations stood at ₹2,48,660 crore, down 6% from previous quarter. It had recorded a one-time gain from selling its stake in Asian Paints for nearly ₹8,900 crore.

Brokerages remain positive on company, with most retaining 'buy' and 'add' ratings post results. Price targets imply an upside of 8-19% from current levels. "We see 3 growth triggers for RIL in near term: scale-up of new energy business; Jio tariff hikes; and potential IPO/listing for Jio which has now been pushed beyond 2025," said Nomura. The stock may underperform in near term. "In absence of clear catalysts, stock may remain a laggard," said Hemang Jani, director at Finazenn.


Jani said Q1 results for O2C and retail businesses were below market expectations, while telecom unit results were in line with expectations.