RIL shares fall ahead of Q4 result; plummet 8% in a week

Shares of Reliance Industries (RIL) dropped over 1% on the BSE in Friday’s intraday trade, ahead of its January-March quarter (Q4 FY22) result scheduled to be released later today. The stock of the country’s most valued firm has been falling for the past five sessions and hit its lowest level since April 18, 2022.

RIL share price opened flat at ₹2,640.75 and fell as much as 1.45% to touch a three-week low of ₹2,602.40 on the BSE. The stock was trading lower than 5-day and 20-day moving averages, but higher than 50-day, 100-day, and 200-day averages.

In the past one week, shares of billionaire Mukesh Ambani-led company have declined 8.4%, while it slipped 1% over one month. On a year-to-date (YTD) basis, the stock delivered positive returns of 8% to its shareholders, while it gained 35% in the last one year. In comparision, the BSE benchmark Sensex has risen 12% in one year period, while it dropped more than 7% since the beginning of the calendar year 2022.

Reliance is scheduled to release its earnings reports for the March quarter as well as the full-financial year 2022 post-market hours today. According to domestic brokerage ICICI Securities, RIL is set to report a strong compound annual growth rate (CAGR) in earnings (29%) over FY22-24E led by a robust OTC (oil to chemicals) margin environment, steady growth in digital services and strong momentum in its retail segment. The company’s entry into green energy-related Giga factories and the reviving upstream segment are also expected to boost growth over the next 24-36 months, says the agency.

“RIL share has been a standout performer over the last 12 months; valuations of 18x FY24E PER/ 10.5x EV/EBITDA and 1.8x P/BV factor in the upsides, with near-term stress on return ratios owing to stronger-than-estimated capital allocations/challenges inherent in scaling up of new energy plans, making us cautious on material upsides hereon,” it says in a report.

ICICI Securities has re-initiated coverage on the Reliance stock with an “ADD” rating and a target price of ₹2,960, an upside of around 12% upside from the current market price. The agency pegs that RIL has the potential to double consolidated EBITDA by FY24E vs FY19 levels and net earnings growing 2.3x over the same period.

For the third quarter ended December 31, 2021, RIL had posted a 37.9% year-on-year rise in consolidated net profit to ₹20,539 crore as compared to ₹14,894 crore in the year-ago period. It clocked a 52.2% increase in revenue to ₹2,09,823 crore in Q3 FY22, as against ₹1,37,829 crore in the corresponding quarter of FY21. The company had attributed this significant rise in revenue to higher volumes and improved price realisation on the back of increase in crude oil prices. Its net profit includes an exceptional gain of ₹2,872 crore as the company divested all its shale gas assets.