Reliance Industries Shares Slump Post Q1 Results, Brokerages Positive; Here's What Analysts Say; BUY?

Reliance Industries Ltd (RIL), India's largest conglomerate, witnessed a notable decline in its share price on Monday following the announcement of its Q1 FY25 results. The stock dropped nearly 3% in the morning trades, with the price opening at Rs 3,017.50 per share and falling to lows of Rs 3,018.05 on the National Stock Exchange (NSE). This decline came after the company reported its Q1 earnings post-market hours on Friday, which showed a consolidated net profit of Rs 17,445 crore, a year-on-year decline of slightly more than 4%. Despite meeting analysts' expectations, the earnings slump was primarily attributed to the underperformance of its Oil-to-Chemicals (O2C) segment. Here is what analysts say:

Morgan Stanley: Overweight Rating, Target Cut to Rs 3,417/Share

Morgan Stanley maintained an 'Overweight' rating on Reliance Industries, though it revised the target price down to Rs 3,417 from Rs 3,540 per share. The firm highlighted that while the earnings and EBITDA missed expectations, the balance sheet outperformed with a decline in net debt and capex intensity. They expressed optimism about a rebound in the energy and telecom sectors in the upcoming quarters. Morgan Stanley also noted RIL's strategic shift in its retail segment, focusing on margins amid weak domestic discretionary demand.

JP Morgan: Overweight Rating, Target Cut to Rs 3,307/Share

JP Morgan also kept its 'Overweight' rating but slightly lowered the target price to Rs 3,307 from Rs 3,320 per share. The firm's analysis indicated that the results were broadly in line with their expectations, and they remain confident about the company's prospects.

Nomura: Buy Rating, Target Raised to Rs 3,600/Share

Nomura took a more optimistic stance by maintaining a 'Buy' rating and raising the target price to Rs 3,600 from Rs 3,450. They pointed out that despite the challenging environment, the O2C segment performed well. Nomura also emphasized the moderation of reported net debt to Rs 1.12 trillion and the increased capex to Rs 288 billion.

Goldman Sachs: Buy Rating, Target Cut to Rs 3,415/Share

Goldman Sachs retained its 'Buy' rating but cut the target price to Rs 3,415 from Rs 3,430 per share. They noted that the Q1 EBITDA was in line with expectations and that the company continues to have a strong pipeline of catalysts moving into the second half of the fiscal year. They expect a 14% QoQ growth in EBITDA in Q2, driven by a recent ARPU hike and stronger refining margins.

Bernstein: Outperform Rating, Target At Rs 3,160/Share

Bernstein maintained an 'Outperform' rating with a target price of Rs 3,160 per share. They focused on the positive aspects of RIL's financial health and future growth prospects.

Macquarie: Neutral Rating, Target At Rs 2,750/Share

Macquarie took a more cautious approach with a 'Neutral' rating and a target price of Rs 2,750 per share. They pointed out that the upcoming Annual General Meeting (AGM) could provide updates on spin-offs and progress in the new energy business, which could act as catalysts for the stock.

Kotak Institutional Equities: Add Rating, Target Raised to Rs 3,300/Share

Kotak Institutional Equities maintained an 'Add' rating and revised the fair value to Rs 3300 from Rs 3,200 per share. They highlighted that the consolidated EBITDA was slightly below their estimates, with the O2C and Retail segments particularly weak. They expect investor focus to shift to potential announcements at the AGM and recovery in the retail and O2C segments.

JM Financial: Buy Rating, Target At Rs 3,500/Share

JM Financial reiterated a 'Buy' rating with an unchanged target price of Rs 3,500 per share. They pointed out that the consolidated Q1 EBITDA was slightly below expectations due to weak O2C and Retail segment performance. They noted positive aspects such as the decline in net debt and the potential for free cash flow generation if capex remains controlled.

Jefferies: Buy Rating, Target At Rs 3,525/Share

Jefferies maintained a 'Buy' rating with a target price of Rs 3,525 per share. They acknowledged the decline in EBITDA but noted that it was in line with estimates. They emphasized that while the O2C and Jio segments performed as expected, the Retail segment missed due to soft growth.

The shares of Reliance Industries were seen trading with cuts of nearly 3% at Rs 3,028.45 per share as of 9:50 am on the National Stock Exchange (NSE). The stock has delivered returns of nearly 25% in the last one year.

Despite the immediate market reaction, analysts remain largely positive about Reliance Industries' future prospects. The company's diversified business model, spanning across oil-to-chemicals, retail, digital services, and new energy ventures, provides a robust platform for growth. The focus will likely shift to the upcoming AGM, where investors expect significant announcements regarding the potential spin-offs of Jio and the Retail business, as well as progress in the new energy segment.

Furthermore, the company's pivot in the retail segment to enhance margins, along with expected improvements in the energy and telecom sectors, provides a positive outlook. Analysts anticipate a rebound in these segments in the coming quarters, driven by recent tariff hikes and stronger refining margins.

Reliance Industries' Q1 results have generated a mixed response from the market, leading to a temporary dip in its share price. However, the overall sentiment among analysts remains positive, with many maintaining their 'Buy' or 'Overweight' ratings, albeit with slight adjustments to target prices. The focus now shifts to the upcoming AGM and the company's ability to navigate the challenges in its O2C and Retail segments while capitalizing on growth opportunities in telecom and new energy ventures.