Reliance stock tanks over 7% post earnings to lowest in 3 months — here's what brokerages are saying

• The shares of Mukesh Ambani-owned Reliance Industries (RIL) touched a three-month low of ₹1,910 on Monday.
• This decline comes post its second-quarter earnings on October 30, where it recorded a 32.5% year-on-year decline in its standalone net profit along with the overall revenue dipping 32.7%.
• Brokerages have shown mixed sentiments towards RIL share price stock after the oil-to-telecom behemoth posted its quarterly result.

The shares of Mukesh Ambani-owned Reliance Industries (RIL), India's most-valued company, tanked 7% during trade on Monday, touching a three-month low of ₹1,910 at 1:00 pm.

This decline comes post its second-quarter earnings on October 30, where it recorded a 32.5% year-on-year decline in its standalone net profit along with the overall revenue dipping 32.7%. The revenue from nearly all its segments from petrochemicals to refining contracted during the quarter.


Brokerages have mixed views on RIL

Brokerages have shown mixed sentiments towards RIL share price stock after the oil-to-telecom behemoth posted its quarterly result.

Brokerage	Recommendation	Target Price
Macquarie	Underperform	₹1,195
Edelweiss Securities	Hold	₹2,105
Emkay Global Financial Services	Hold	₹1,970
Motilal Oswal	Buy	₹2,240
Prabhudas Liladher	Buy	₹2,055
BOB Capital	Reduce	₹2,000
Goldman Sachs	Buy	₹2,330
Axis Capital	Add	₹2,220

Why are brokerages cautious?

Petchem business to remain muted

According to BOB Capital, RIL’s forthcoming earnings are going to remain a drag. The Refining and petrochemicals, which together make for over three-fourth of the company’s revenue took a major hit in the September quarter. And, post the resurgence of coronavirus in Europe, the global oil demand recovery has seen disruptions.

Segment	Revenue segments in Q2
Petrochemicals	₹ 29,147 crore
Digital Services	₹267 crore
Oil and Gas	₹72 crore
Retail	₹38 crore
Financial Services	₹326 crore
Others	₹304 crore
Refining	₹49,859 crore

In the second quarter, the gross refining margin (GRM) fell to $5.7 a barrel compared to $6.3 a barrel just three months ago. And, BOB Capital noted that RIL’s valuations are highly sensitive to GRM and petrochemical crack movements. But it also noted that “Better-than-expected recovery in global economies can raise these spreads and alter our valuation outlook.”


The Prabhudas Lilladher report dated October 31 said, “We lower our FY21 standalone earnings by 21% to factor in weak H1 performance. We also change our FY22-23E estimates to factor lower refining and petrochemical spreads and make changes in finance and depreciation charges.”

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