Ambit Capital has kept its “sell” rating for Reliance Industries Ltd. (RIL), but raised the target price to ₹2,650 per share from ₹2,600 earlier.
According to the brokerage, RIL’s stock underperformed the Sensex by 3% last year, and its performance has been worse since September 20, following the fundraising by its consumer businesses. The brokerage noted that it is unclear how the company will reduce debt through methods like using InvITs (Infrastructure Investment Trusts). Other businesses apart from fossil fuels and consumer sectors aren’t generating any returns.
The true profitability of RIL’s consumer businesses could be lower if the “others” segment stops offering cheaper services to them, the brokerage said.
RIL’s ambitions to keep growing its consumer businesses and building new areas like renewable energy may clash with competitors, both global and local, which could lead to lower long-term returns. The brokerage also pointed out that RIL’s consumer businesses are growing slower than its competitors.
RIL’s plans for investing in new energy projects are delayed, and the company is struggling to bring in new strategic investors to support its media and renewable energy goals, the report added.
The brokerage expects RIL’s revenues to be ₹9,99,100 crore in fiscal 2025, ₹10,60,900 crore in 2026, and ₹11,55,100 crore in 2027. The company’s estimated net profits are ₹77,200 crore in 2025, ₹87,400 crore in 2026, and ₹1,03,500 crore in 2027.
Reliance Industries Ltd. shares have plunged by more than 10% over the past four days, wiping out nearly Rs 2.1 lakh crore from its market capitalization.
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