Reliance Industries (NS:RELI), India’s largest listed company, has seen its shares fall over 20% from their peak in July this year.
This sharp decline has placed the conglomerate on the brink of ending its decade-long streak of delivering positive calendar-year returns.
With only three trading sessions left in 2024, the stock would need to turn things around quickly to avoid breaking its longest monthly losing streak since the COVID-19-induced market slump.
Till now in December, the stock has dipped over 5%.
Reliance’s share price: technical indicators
Riyank Arora, technical analyst at Mehta Equities, said Reliance has given a break-down below its support mark of ₹1,217.25 (£11.37) and is “seeing a dead cat bounce in follow-through.”
The analysts told Invezz that
An anchor vwap resistance level is placed around ₹1260 – ₹1275 levels from where we can see another round of selling coming in the stock. Overall, we expect the stock to go towards ₹1150 and ₹1160 potential targets in coming few weeks.
Reliance: fundamental analysis
Most brokerages remain strongly bullish on the stock despite its lackluster returns this year.
In a research note released earlier this, Motilal Oswal (NS:MOFS) maintained its “buy” rating on the stock with a target price of ₹1,580.
Motilal Oswal highlighted that Reliance Industrie has underperformed broader benchmarks, Bharti Airtel (NS:BRTI), and organized retail peers in recent years, despite comparable or superior EBITDA growth.
This underperformance is attributed to higher capital expenditure in Retail and RJio and the lack of free cash flow (FCF) generation.
The brokerage notes that capital expenditure has likely peaked and expects RIL to generate a cumulative FCF of approximately ₹1 trillion over FY24-27.
It views the current valuation as compelling, with the stock trading near its bear-case valuation, presenting a favorable risk-reward ratio (1:10 skew).
Using the Sum-of-the-Parts (SoTP) method, Motilal Oswal values the key segments as follows:
- O2C/E&P: valued at 7.5x/6x Dec’26 EV/EBITDA, resulting in an enterprise value of ₹445/share for the standalone business.
- Jio Platforms Limited (JPL): equity valuation of ₹530/share.
- Reliance Retail Ventures Limited (RRVL): equity valuation of ₹600/share.
- New Energy Business: assigned ₹44/share based on a ₹600 billion equity valuation.
- Disney (NYSE:DIS) JV Stake: valued at ₹26/share based on the transaction value.
The analysts believe these valuations reinforce a positive long-term outlook for RIL, supported by improving FCF dynamics and strong growth potential across its core and emerging businesses.
Last month, analysts at Yes Securities and Geojit Financial also retained their “buy” rating on the stock.
Yes Securities has a target price of ₹1,500 on the stock. The brokerage said that Reliance Industries’ share price has seen a major correction and is now trading at its bear case scenario, with limited downside from here.
Geojit Financial has a price target of ₹1,516 on the stock.