Reliance Shares Drop 2% as Six Brokerages Slash Target Prices

Reliance Industries (RIL) shares fell by 2.3% on Monday, closing at Rs 2,681.25 on the BSE, after six brokerages lowered their target prices following the company’s weak Q2 results. The new target prices range as low as Rs 2,990.

For the quarter ending September 2024, RIL reported a 5% drop in consolidated net profit, falling to Rs 16,563 crore from Rs 17,394 crore the previous year. Revenue from operations only increased slightly by 0.2% year-on-year to Rs 2.35 lakh crore.

In response to the Q2 results, various brokerage firms made the following adjustments to their target prices:

• Citi: Reduced its target to Rs 2,990 from Rs 3,200, citing ongoing weakness in the O2C segment and retail, with the latter showing its first negative year-on-year growth since the pandemic.
• Axis Capital: Cut its target to Rs 3,557 from Rs 3,683, noting underperformance in the stock compared to the broader market.
• UBS: Lowered its target to Rs 3,250 from Rs 3,420, adjusting earnings forecasts due to lower subscribers and revenue growth in retail.
• Nomura: Reduced its target to Rs 3,450 from Rs 3,600, factoring in lower refining and petrochemical margins.
• Jefferies: Cut its target to Rs 3,400 from Rs 3,500, suggesting that the current valuation may leave room for positive surprises in retail growth.
• JP Morgan: Decreased its target to Rs 3,125 from Rs 3,351, indicating potential improvements in the commodity business and retail performance during the festive season.

Despite these cuts, RIL shares closed 2.05% lower at Rs 2,689 today.