Reliance Share Price Falls 4% In 3 Days, Rs 68,000 Crore Investors Wealth Erased; Buy On Dips?

Billions of dollars of investors' wealth has been erased in Reliance Industries (RIL) as the stock plummets by a little over 4% in the current week's trading session. RIL shares are on a 3-consecutive day losing streak with market cap toppling by more than Rs 68,000 crore. While RIL is expected to benefit from the launch of Jio Airfiber which comes as a positive factor, however, its polymer margins are expected to be under pressure ahead. Antique Stock Broking has maintained a buy rating on RIL stock but lowered its target price. But the latest huge selloffs make RIL shares cheaper to buy.

On Thursday, RIL shares dipped by nearly 1% to hit an intraday low of Rs 2359 apiece. Its market cap struggled to hold the Rs 16 lakh crore mark. At the intraday low, the stock did touch a market cap of around Rs 15.96 lakh crore, down by Rs 15,471 crore from the market cap of Rs 16,11,638.99 crore on September 20 where the stock price was at Rs 2,382.10 apiece.

On the previous day, RIL shares dipped by over 3% both on BSE and NSE.

RIL shares have been in red since September 18 and have tumbled by 4.11% in these three trading sessions. Last week, on September 15, the stock stood at Rs 2,452.75 with a market value of Rs 16,58,319.97 crore. That being said, the sharp dumping of shares has pushed down RIL's market cap by over Rs 68,155 crore in these three sessions.

RIL has been in focus this week for its launch of Jio AirFiber in eight cities namely -- Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune on September 19.

In its research note, Antique Stock Broking said, "The launch of Airfiber gives RIL a significant advantage, especially since we believe they are likely to have tied up equipment supply. We also believe RIL would be able to capitalize on quicker 5G rollout."

Further, the brokerage revisited RIL's O2C global fundamentals. It added, "While polymer margins lag on
delay in Chinese demand improvement, paraxylene (PX) has outperformed. After a very weak 1QFY24, refining margins have recovered."

Accordingly, in O2C business, the brokerage's note said, "We expect polymer margins to remain under pressure, though polyethylene (PE) is likely to improve, while polypropylene (PP) is set to recover marginally late in 2024. Despite large capacity addition, PX is likely to remain strong, while purified terephthalic acid (PTA) margins are likely to hover close to cash costs. Refining margins are likely to remain strong over the next 12 months as transport fuel incremental supply is likely to lag demand growth, though Russian discounts have come off."

Also, the completion of the current tranche of new energy project and the announcement of the next phase would be the next large trigger for RIL's stock performance. O2C could potentially throw a positive surprise if capacity rationalization were to happen in the polymer space, it said.

Although the brokerage maintained BUY, however, it lowered its target price for RIL.

"We lower our FY24/ FY25 estimates by 7% and 2% respectively. Maintain BUY with a revised target price of Rs 2,721/share," the note said.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.