RIL stock slips as investors focus on company’s earnings

Shares of Reliance Industries Ltd fell 3% on Friday as investor focus turned to its earnings after the company said it completed a fundraising programme by selling 10% stake in Reliance Retail Venture.

RIL's scrip is trading lower for the fourth consecutive session. In intraday, the scrip fell as much as 2.95% to hit a low of Rs1,915 a share. At 10.32am, RIL was trading at Rs1,934 on BSE, down 2% from its previous close.

The company had on Thursday informed exchanges that it has for time being completed inducting partners and raising funds for Reliance Retail Ventures. It got Rs47,265 crore from financial partners and allotted a 10.09% stake to them.

"We need to see earnings traction to justify the recent surge in stock price, as the rally factors in the debt reduction trigger. Global economies are still struggling to come out of the pandemic-induced slowdown, with India being the worst affected (among large economies)," said BoB Capital in its 31 October report.

On 2 November, brokerage firm Macquarie Research issued an underperform rating to RIL's scrip with a price target of Rs1,195, giving it a downside potential of 42%.

During the second quarter earnings, RIL reported a 15% decline in its net profit amid sharp fall in refining margin, weak retail and Jio operations.

Jio's net subscriber addition was on a lower side at 7.3 million to reach 405.6 million at the end of September quarter. Its Arpu (average revenue per user) saw a modest improvement to Rs145 from Rs140.3 quarter on quarter, albeit this remains at a discount to Bharti Airtel at Rs162.

Retail business margin improved sequentially to 4.9% from 3.4% but lower at 5.6% year-on-year due to a decline in revenues for the fashion and lifestyle, and consumer electronic segments. Further, petchem margins improved quarter on quarter to 20.1% from 17.6% while volume also grew 9% at 9.7 mmt. However, Ebitda at refinery business dipped to $3.7/bbl from $4.3/bbl. Its gross refining margin fell to $5.7 per barrel, a level it hasn't seen since 2009.