RIL Shares Downgraded By Macquarie: Here's Why

Shares of RIL extended losses for yet another day, dropping another 2% to Rs. 1411.70 versus its previous session's close of Rs. 1442.50 per share on the BSE.

RIL Shares Downgraded By Macquarie: Here's Why

The downward slide in the stock is on the back of a downgrade by global broking firm Macquarie which downgraded the stock to 'underperform' category. This the company did after CLSA revised the target price of RIL higher to Rs. 2000 per share. The downgrade has been made after the company suggests that all the positives have already been discounted. Further, the company says that it could tactically buy into RIL at a price of around Rs. 1200.

Though the company highlights a number of positives at the firm such as its entrepreneurial vision, execution when it comes to large scale projects, strong hold in capturing growth from digital economy, monetisation capability as well as disruptive bent among others.

Further the downgrade has been made despite the company reporting its highest ever quarterly profit. Though, the revenues at the leading conglomerate took a downward hit by over 1%.

The key risks highlighted by Macquarie on RIL include RJio's ARPU, no Saudi Aramco bid plus the increasing competition in the retail space.

So, if the investor is holding a growth at any price approach, one should go long in the stock. Nonetheless, in case he or she has a view of "growth at a reasonable price", then the profit should be booked at current levels.

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