Highlights:
- The share price of Reliance Industries Limited drops
- RIL was trading at ₹ 1,934 on the Bombay Stock Exchange, down 2% from last close
- RIL recently sold a 10% stake in Reliance Retail Venture
On Friday morning, the shares of India’s most valued company – Reliance Industries Limited – fell 3% as company’s investors turn their focus to its earnings after RIL announced it has recently completed a fundraising programme by selling a 10% stake in the Reliance Retail Venture.
It for the fourth consecutive day session that RIL’s scrip was trading lower. In intraday, the scrip fell as much as 2.95% to hit a low of ₹ 1,915. At 10:32 AM, Reliance Industries Limited was trading at ₹ 1,934 on BSE, which was down 2% from the previous close.
On Thursday, the firm informed exchanges that, for the time being, it has completed inducting partners and fundraising for Reliance Retail Ventures. It raised ₹ 47,265 crore from its financial partners for diluting and allocating 10.09% stake to them.
Bank of Baroda Capital (BoB Capital) said, “We need to see earnings traction to justify the recent surge in stock price, as the rally factors in the debt reduction trigger,” in its report dated 31st October.
The report also said, “Global economies are still struggling to come out of the pandemic-induced slowdown, with India being the worst affected (among large economies)”.
On the 2nd of November, brokerage company Macquarie Research issued an underperform rating to Reliance Industries Limited’s scrip with and put a price target of ₹ 1,195, giving it a downside potential of a staggering 42%.
In the second quarter earning, Reliance Industries Limited reported a decline of 15% in its Net Profit owing to a nosedive in the refining margins, Jio operations and weak retail.
The new subscribers addition of Jio was also lower, standing at 7.3 million (73 lakh) to reach 405.6 million (40.56 crore) at the end of the September quarter.
The Average Revenue Per User (APRU), however, saw a slight improvement as it increased to ₹ 145 from ₹ 140.3 quarter on quarter, albeit this is still lower to than its biggest competitor, Bharti Airtel, whose APRU stood at ₹ 162.
Even the retail business margin saw a slight improvement to 4.9% from 3.4% but was still lower to 5.6% year-on-year due to a decline in revenues for the fashion and lifestyle, and consumer electronic segments.
Additionally, the PetChem (Petro Chemical) margins improved quarter on quarter to 20.1% from 17.6% and even the volume witnessed a growth of 9% at 9.7 MMT (Million Metric Ton). However, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) at the refinery business dipped to $3.7/bbl from $4.3/bbl. Even the gross refining margin fell to $5.7 per barrel, a level it hasn’t seen since 2009.
