Shares of Reliance Industries (RIL) hit a fresh 52-week low of Rs 2,207.35, down 1.3 per cent on the BSE in Thursday’s intra-day trade. The stock of India’s most-valued company in terms of market capitalisation (market-cap) was quoting lower for the sixth straight trading day and has declined 9 per cent during this period.
RIL quoted at its lowest level since March 8, 2022, when it had hit a low of Rs 2,181 in intra-day trade.
A sharp decline in stock price of RIL has seen its market-cap fall below Rs 15-trillion-mark in intra-day today. At 09:38 AM; RIL’s market-cap stood at Rs 14.94 trillion on the BSE, the exchange data shows.
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Earlier, on December 6, 2021, RIL market-cap was at Rs 14.99 trillion on closing level basis. The company’s market-cap has been declined by Rs 4.12 trillion from its all-time high level of Rs 19.07 trillion registered on April 28, 2022, the CapitalinePlus data shows.
In past three months too, RIL has underperformed the market by declining 14 per cent, as against 7 per cent fall in the S&P BSE Sensex.
Reliance Jio on Tuesday has introduced a new set of postpaid family plans Jio Plus, wherein a family of four can to try services free of cost for a month. Plans starting from Rs 399 have been launched ahead of the Indian Premier League (IPL), which begins on March 31. Reliance-backed Viacom 18 has the rights for the tournament and will be offered free on Jio Cinema apps.
Jio has been slow to grow in the postpaid segment and the move will pit it against Bharti Airtel, which has seen an increase in subscriptions in this segment in recent months. Growth in postpaid subscribers and upgrades of 2G customers to 4G has also helped Airtel grow its average revenue per user, the Business Standard reported. CLICK HERE FOR FULL REPORT
Jio has so far lagged in postpaid segment (largely given the sticky nature of customer base). The above plans are mainly to capture Vodafone Idea post paid base, which has, so far, had seen superior churn towards Airtel, ICICI Securities said in a note.
Meanwhile, post October-December quarter (Q3FY23) results, analyst at Prabhudas Lilladher cut its FY23-25E earnings by 4 per cent/0.3 per cent to factor in higher finance charges due to rising interest rates, lower other income and higher tax charges due to lower tax credits.
Q3 benefitted from strong refining performance offset from lower thruput, due to planned maintenance along with weak polymer and polyester margins. Retail segment saw healthy growth as outlets operated normally, while Jio reported steady performance given no tariff hikes and customer additions (+1.2 per cent QoQ), the brokerage firm had said in result update.
Analyst also reduce its average revenue per user (ARPU) hike over FY24-25 to Rs 211/240 (Rs 219/252 earlier) given delayed pricing action. “However, weak financial condition of VI (not rated) means subscriber migration to Jio and Bharti could accelerate; we have factored in 24mn subscriber addition over FY24/25 for Jio,” the brokerage firm said.
With RIL in the midst of its next wave of investments toward 5G rollout, new energy giga factories and consumer brands, capex needs are likely to outpace cash generation over the next two years. This could keep ROCE below potential till new businesses become self-sustainable are key downside risks, according to analyst at BOBCAPS said.
The brokerage firm however, has ‘BUY’ rating on RIL with target price of Rs 2,840 (Rs 2,670 earlier).
The increase in target price is mainly driven by an Rs 322/sh rise in valuation of the consumer businesses following a roll-forward of valuation base to FY25 and is partially offset by a Rs 166/sh increase in net debt and a Rs 21/sh decrease in value of the energy business. We assume option value of the new energy business at US$ 10bn (unchanged), the brokerage firm said in January report, post Q3 results.
Technical View
Bias: Negative
Target: Rs 1,910
Support: Rs 2,185
Resistance: Rs 2,350; Rs 2,420
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Since the last four trading sessions, the stock has consistently been trending along its lower-end of the Bollinger Bands on the daily chart. The same presently stands at Rs 2,233. The stock needs cross and sustain above this level in order to trigger hopes of a bounce back.
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However, the overall trend remains negative for the stock as it trades considerably below the key moving averages. The pullback if any could meet stiff resistance around Rs 2,350 level, wherein lies the 20-DMA.
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The medium-term trend is likely to remain bearish as long as the stock trades below its 100-WMA (Weekly Moving Average) placed at Rs 2,420.
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On the downside, break and sustained trade below Rs 2,185, can trigger a fall towards the two-year trend line support at Rs 1,910-odd level.
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(With inputs from Rex Cano)
