Reliance Industries share price drops 2.5% after Q3 results: Is it an opportunity to buy?

Shares of India's most-valuable firm, Reliance Industries (RIL), declined up to 2.5% in trade on Monday, January 19, after its third-quarter (Q3) results missed analysts' estimates, hurt by the weakness in the retail performance.

RIL share price slumped to ₹1420 on the BSE and was among the top Sensex losers in the morning trade today.

RIL Q3 Results

Billionaire Mukesh Ambani-led Reliance Industries posted a consolidated net profit of ₹18,645 crore for the third quarter, which was below the average estimate of ₹19,644 crore, according to estimates by LSEG.

Meanwhile, its Q3 earnings before interest, tax, depreciation and amortisation (EBITDA) stood at around ₹46,000 crore, up 5% year-on-year but flat quarter-on-quarter.

The figure missed consensus estimates by 3.9% due to retail gross revenue growth being muted at 8.1% YoY and EBITDA growing only 1.1% YoY.

The company said Reliance Retail's revenue growth was hit by the festive shift to 2Q and the FMCG demerger, while profitability was hurt by the accelerated scale-up in Quick Commerce (QC), lower salience of fashion & lifestyle, and new labour code implementation.

The management, however, downplayed the near-term growth weakness and said it was confident of double-digit retail revenue growth.

The Reliance Jio revenue was higher by 11.8% YoY, driven by a 1% QoQ ARPU uptick and ~8.9m subscriber net adds. The management didn’t comment on the tariff hike timeline as it is satisfied with the improvement in customer traction. It added that the Jio IPO was on track, unless the final finance ministry notification on large IPO minimum float norms is significantly delayed.

The O2C EBITDA rose at a relatively modest 15% to ₹16,507 crore, supported by only 2% growth in crude oil throughput. OTC prospects remain resilient, with strong domestic demand and closures of high-cost units globally for refining, alongside petchem to support the demand-supply balance over the medium term.

RIL share price: Time to buy?

Overall, analysts maintained their bullish views on the stock, even as domestic brokerage Motilal Oswal cut the FY26-28E EBITDA and PAT by 0-3%, broadly due to weaker growth in Reliance Retail and higher interest costs in RJio. "We build in a CAGR of ~10%/7% in RIL’s consolidated EBITDA/PAT over FY25-28."

The brokerage reiterated a ‘BUY’ rating on Reliance stock with a revised target price of ₹1,750 (as against ₹1,790 earlier).

JM Financial reiterated a 'BUY', with Reliance share price target of ₹1,730 due to comfortable valuations after the recent correction, and as RIL’s industry-leading capabilities across businesses are likely to drive robust 14-16% EPS CAGR over the next 3-5 years, driven by both consumer businesses.

ICICI Securities, meanwhile, opined that RIL’s EBITDA and PAT CAGR of 13/15.5% respectively over FY26-28E remains peer leading in the sector and upside risk exists to these estimates, with stronger momentum possible in retail/consumer products/JIO over the next few years and additional delta from New Energy contribution not really factoring in estimates as of now.

Its SoTP-based valuation for RIL, based on EV/EBITDA multiples for the different segments, delivers a TP of ₹1740/share. The brokerage also has a 'BUY' rating on RIL stock.

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