Reliance Industries Rises Monday, Still Underperforms Market

Reliance Industries Ltd (RIL), India's largest conglomerate, saw its shares rise on Monday, January 16, 2025, despite underperforming the broader market. The stock closed at ₹1,305.45, up 0.24% from the previous day's close. However, the stock has underperformed the market over the past few months, and analysts have expressed concerns about the company's growth prospects.



The underperformance can be attributed to several factors, including weak results from IT major Infosys, Nomura's reduction in price target for RIL, negative analyst opinions, and earnings misses. Additionally, the company's high valuations in earnings multiples may have made it less attractive to investors compared to other opportunities in the market.



Reliance Industries' financial performance and growth prospects have evolved over the past year. The company reported a revenue of ₹267,186 crore and a profit after tax of ₹21,930 crore in the quarter ended December 2024, up 7.7% and 11.7% YoY, respectively. However, the Oil & Gas segment's revenue declined by 5.2% YoY, mainly due to a 5.3% decline in KG D6 volumes.

The company's digital services (Jio) and retail (RRVL) segments have shown strong growth, with revenue increasing by 19.2% and 8.8% YoY, respectively. The O2C segment's revenue grew by 6.0% YoY, led by operational excellence and favorable feedstock sourcing. However, the company's net cash flow was down 12.08% YoY, primarily due to lower capital expenditure.

Analysts' views on Reliance Industries have deteriorated over the past four months, with analysts' opinions revised negatively over the past twelve months. The average consensus view of analysts covering the stock has also deteriorated. Despite the recent slowdown in the Oil & Gas segment, Reliance Industries' diversified business portfolio and strong performance in consumer businesses indicate robust growth prospects.



In conclusion, Reliance Industries' shares rose on Monday, January 16, 2025, but the stock has underperformed the broader market over the past few months. The company's financial performance and growth prospects have evolved positively over the past year, with strong revenue and profit growth across most segments. However, analysts have expressed concerns about the company's growth prospects, and the stock's high valuations may have made it less attractive to investors. The company's focus on digital services, retail, and O2C segments is expected to drive future growth, and investors should closely monitor the stock's performance and the company's progress in these areas.