Shares of Reliance Industries (RIL) experienced a notable decline of 3.2% to ₹1,428.60 following the release of its quarterly earnings, which fell short of market expectations. Despite the dip, analysts maintain a positive outlook on the stock, citing potential growth drivers in the coming years.

Q1 Financial Performance

RIL reported a significant increase in profit after tax, reaching ₹30,681.00 crore, up 36.8% from the previous quarter. However, operational revenues saw a 6% quarter-on-quarter decrease, settling at ₹2,48,660.00 crore. The company's financial results included a one-time gain of ₹8,900.00 crore from the sale of its stake in Asian Paints.

Stock Performance and Analyst Outlook

Despite the recent decline, RIL's stock has shown strong performance year-to-date, gaining 17% compared to the Nifty's 5.7% rise. Brokerages continue to maintain 'buy' and 'add' ratings on the stock, with price targets suggesting an upside potential of 8-19%.

Analysts have identified three key growth triggers for Reliance Industries:

1. Scale-up of the new energy business
2. Potential Jio tariff hikes
3. Possible Jio IPO beyond 2025

Segment Performance

The quarterly results revealed mixed performances across RIL's diverse business segments:

• Oil-to-chemicals and retail businesses fell short of expectations
• Telecom unit (Jio) performance met estimates

Telecom Business IPO Deferral

The stock's decline also followed earlier corrections after management announced the deferral of the telecom business IPO to next year. This decision came despite previous market expectations of an imminent announcement.

While the recent quarterly results may have disappointed some investors, the overall analyst sentiment remains positive, with expectations of growth in key business segments and strategic moves in the coming years.

Reliance Industries Limited (RIL), India's largest private sector company by market capitalization, has reported strong quarterly results, but its shares declined despite the impressive performance.

Financial Highlights

Reliance Industries reported its highest-ever consolidated quarterly EBITDA of ₹58,024.00 crore, representing a 35.7% year-on-year increase. The company's net profit surged to ₹30,783.00 crore, marking a 76.5% growth. However, it's important to note that these strong numbers included a one-time gain of ₹8,924.00 crore from the sale of listed investments. Excluding this gain, EBITDA grew by 15% and profit increased by 25%.

Segment Performance

Digital Services

Jio Platforms showed robust performance with revenue increasing by 18.8% to ₹41,054.00 crore. The company crossed a significant milestone of 200 million 5G subscribers, highlighting the rapid adoption of its 5G services.

Retail

Reliance Retail reported an 11.3% growth in revenue, reaching ₹84,171.00 crore. However, this growth rate represents a deceleration compared to previous quarters and fell short of analyst estimates.

Oil-to-Chemicals

The Oil-to-Chemicals segment experienced a slight decline in revenue, decreasing by 1.5%. This was attributed to planned maintenance shutdowns during the quarter.

Market Response and Analyst Outlook

Despite the strong results, Reliance Industries shares declined by 2.10% to ₹1,445.00. The market's reaction reflects a mixed outlook from brokerage houses:

• JPMorgan maintained an overweight rating and raised its target price to ₹1,695.00.
• Morgan Stanley noted that the earnings didn't provide sufficient growth confidence.
• Macquarie warned of potential near-term share price moderation, citing lacklustre retail performance.

Conclusion

While Reliance Industries has posted record quarterly profits and EBITDA, the market response has been cautious. The company's performance across its diverse business segments shows both strengths and areas for potential improvement. Investors and analysts will likely continue to closely monitor the company's growth trajectory, particularly in its retail and digital services segments, as well as its ability to maintain profitability in its core businesses.