RIL shares tank over 4% as Q1 earnings miss expectations

Shares of oil-to-telecom major Reliance Industries dropped over 4 per cent in Monday's trade after the company's June quarter earnings missed Street expectations.

The company on Friday reported a 46.29 per cent year-on-year (YoY) surge in consolidated net profit at Rs 17,955 crore for the June quarter compared with Rs 12,273 crore in the corresponding quarter last year.

An ET NOW poll of analysts had anticipated the profit figure at Rs 24,311 crore.

Revenue for the quarter jumped 54.54 per cent to Rs 2,23,113 crore from Rs 1,44,372 crore in the same quarter last year. The ET NOW poll had forecast the sales figure at Rs 2,44,244 crore.

Chairman and Managing Director Mukesh Ambani said: “Geopolitical conflict has caused significant dislocation in energy markets and disrupted traditional trade flows. This, along with resurgent demand, has resulted in tighter fuel markets and improved product margins. Despite significant challenges posed by the tight crude markets and higher energy and freight costs, O2C business has delivered its best performance ever."

Reliance posted a strong result albeit a tad below expectations, said Santosh Meena, Head of Research, Swastika Investmart.

"The Street was expecting very strong results due to a robust refining margin environment, courtesy of the Russia Ukraine War and lower petroleum export from China. Further, the telecom and the retail segment reported an all-round positive performance," Meena added.

There could be some moderation in the petroleum business performance due to the global growth slow-down and inflationary headwinds or a situation of stagflation, he said, adding that in the near term the stock might remain under pressure however, the long-term outlook remains positive due to its strong presence in the retail and telecom segments.

Avishek Datta, Research Analyst, Prabhudas Lilladher said, "RIL has added companies like Just Dial, Netmeds & Urban Ladder to create a strong ecosystem of future growth and compete with leaders like Amazon, Walmart & Tata (post acquisition of Big basket and 1mg). We believe entry into futuristic technology and new platforms will continue to power growth in coming years."

He further added that RIL’s vertical growth remains impressive given 1) refining margins remain strong, due to lower supply from Russia and China along with low inventory levels 2) strong gas profitability due to higher volume and realizations, and 3) improving retail profitability trend as pandemic concerns ease. With sim consolidation behind, we expect strong subscriber addition given the shift from 2G to 4G, he said.

Jio Platforms (JPL) posted a 24 per cent on-year rise in net profit at Rs 4,530 crore on gross revenue of Rs 27,527 crore, up 24 per cent, driven by the residual impact of tariff increases in its telecom business and acceleration in home broadband connections.

On Monday, the scrip tanked over 4 per cent to hit an intraday low of Rs 2404 on BSE. With a market capitalisation of over Rs 16,00,000 crore, the shares are trading below the 5, 10, 20, 50, 100 and 200-DMA.

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