Reliance Shares Crash By 3% After Q1 Numbers; Should You Buy Or Sell This Heavyweight Stock?

Heavyweight Reliance Industries share price reacted on a bearish note to the June quarterly figures on Monday. RIL's share price has dropped by nearly 3% and lost more than Rs 45,000 crore of market value. This would also mark the third consecutive selling spree in RIL shares. In Q1 of FY24, RIL's disappointed streets on various verticals with O2C business becoming the biggest spoil sport.

At the time of writing, RIL's share price traded at Rs 2,483 apiece, shedding Rs 53.20 or 2.10%. The stock has nosedived by at least Rs 66.65 or 2.63% in the early deals by hitting an intraday low of Rs 2,469.55 apiece.

That being said, RIL's market cap at a 2.63% drop in shares stood at Rs 16,70,767.13 crore --- down by Rs 45,128.04 crore --- compared to last week's Friday m-cap of Rs 17,15,895.17 crore. Although, RIL still stays as the largest company in India in terms of market share.

RIL share price has been in red since July 20, plummeting by around 13% on BSE (taking into consideration the latest intraday low).

Last week, on Friday, RIL shares felt a heavy blow from bears ahead of Q1 earnings. The stock ended at Rs 2,536.20 apiece down by 3.19% on BSE.
It also needs to be noted that, RIL's global depository receipts (GDR) listed on London Stock Exchange, declined by 5.86% to $62.70 on Friday.

Coming to Q1FY24, RIL posted a consolidated net profit of Rs 16,011 crore, down by 10.83% YoY and 17.03% QoQ. Also, revenue from operations fell by 5.31% YoY and 2.51% QoQ to Rs 210,831 crore. The company's biggest contributor to topline, O2C disappointed street with a 17.7% and 23.2% YoY decline in revenue and EBITDA.

Should you buy RIL shares post the Q1 results?

According to Antique Stock Broking, RIL's 1QFY24 EBITDA at Rs 381 billion (-0.9% QoQ, +0.3% YoY) beat our estimate of Rs 363 billion but was in line with the consensus estimate of Rs 380 billion.PAT at Rs 160 billion (-17% QoQ, -11% YoY) beat our estimate of Rs 148 billion but missed consensus of Rs 170 billion. Strong O2C performance despite commodity headwinds was a surprise, while Retail lagged network growth.

Also, the brokerage highlighted that although Q2C business was down, a strong performance in a weak macro environment. On the RIL's Q2C business, the brokerage's note said, "EBITDA at Rs 152.7 billion (-6.3% QoQ, -23.2% YoY), though down QoQ, was much better than our forecast. A sharp drop in GRM was largely set off by higher petrochem margins, petrochem production, cost savings due to the use of higher coke gasification, feedstock optimization, and gasoline exports to higher realization US market."

Accordingly, the brokerage has maintained its 'Buy' rating on RIL stock but trimmed its target price by 4% to largely reflect the demerger of Jio Financial Services.

It said, "We believe the current phase of capex could be the last for this decade in O2C and telecom, delivering large cash flows in the second half. O2C and Retail are likely to drive earnings in the near term. Maintain BUY with a revised TP of Rs 2,793 (earlier Rs 2,900)."

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.