Reliance Shares Tank 3% After Muted Q1, But Brokerages Remain Bullish

Reliance‘s share price was down in the red on Monday morning after the company’s earnings seemingly failed to impress investors. The stock slumped around 3% to hit an intraday low of around ₹3,018.05.

What Happened: The conglomerate reported a net profit of ₹15,138 crore for the quarter ended June, a decline of around 5% from ₹16,011 crore in the same quarter last year. Revenue from operations for the June quarter was ₹2.36 lakh crore, an increase of around 12% from ₹2.10 lakh crore in the corresponding quarter of the previous year.

While revenue aligned with street estimates of around ₹2.34 lakh crore, its net profit fell short of brokerage projections of ₹17,000 crore. EBITDA for the quarter reached ₹42,748 crore, up 2% from ₹41,906 crore year-over-year, with an EBITDA margin of 16.6%.

Brokerage Reactions: Jefferies maintained its “buy” rating but cut its target price to ₹3,525 from ₹3,580. The research firm said the conglomerate’s Q1 earnings were largely in line, though the retail segment disappointed.

Reliance’s management is focusing on rationalising unprofitable parts in retail to improve margins, the brokerage added. It also expects growth for Jio following the recent tariff hike. However, the outlook for oil-to-chemicals (O2C) profitability remains subdued for the calendar year 2024, the analysts said.

Nomura also maintained its “buy” rating with a target price of ₹3,525. The brokerage said that EBITDA declined 9% quarter on quarter, which was in line with estimates. While O2C and Jio were in line with expectations, the retail segment missed its estimates due to soft growth, the brokerage said.

See Also: HDFC Bank CEO Sashidhar Jagdishan Was Paid ₹10.77 Cr In Salary In FY24

Morgan Stanley maintained an “overweight” rating with a target price of ₹3,540. Q1FY25 earnings and EBITDA missed expectations, but the balance sheet outperformed, the brokerage noted. Energy and telecom segments are expected to rebound in the coming quarters.

Motilal Oswal maintained its “buy” rating for the stock with a price target of ₹3,435. The brokerage said that while the company’s revenue was in line with estimates, EBITDA and profit were a miss.

HDFC Securities maintained its “add” rating raising the price target to ₹3,350 from ₹3,255. The brokerage said that this rating is based on the anticipated recovery in the O2C business, which is expected to drive overall business performance. The analysts also pointed out the EBITDA growth potential in the digital business, driven by improvements in average revenue per user , new subscriber additions and the development of new revenue streams.

Macquarie maintained its “neutral” rating but has hiked the target price to ₹2,750 from ₹2,630. The brokerage said that Q1 results were a material miss against estimates across the Jio, Retail and Oil-to-Chemicals segments. Macquarie continues to see downside risks to consensus earnings per share and believes that the upward drift in consensus earnings faces significant challenges.

Price Action: Reliance’s share price was down 2.70% to trade at ₹3,026.25 as the markets opened on Monday.

Read Next: Suzlon, IEX, HUL, Bajaj Twins To Report Earnings This Week: Check Detailed List

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.