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Brokerage Morgan Stanley has downgraded the rating of Reliance Industries to “equal-weight” from “over-weight”. It has said that the Mumbai-based group’s earnings growth could halve in fiscal 2020.
The shares of Reliance Industries Ltd dipped nearly 3 per cent to Rs 1,258.35, their lowest in more than two months, dragging the broader NSE index.
The brokerage expects the lower availability of Venezuelan and Iranian crude, along with a glut in polyester and gas markets to hit Reliance’s earnings. US sanctions on Venezuela have curtailed availability of heavy crude from the country, it said.
“Upside appears limited amid core business drags, with no material capacity adds,” Morgan Stanley said. “Expect consensus earnings expectations will see their first material cut by 2H19 of 17-20 per cent,” it added.
According to Refinitiv Eikon data, the consensus estimate for FY20 net income is Rs 49,479 crore ($7.08 bln).
Reliance Industries' competitors Indian Oil Corp Ltd slipped marginally, while Oil and Natural Gas Corp edged up 0.2 per cent.
($1 = 69.8610 Indian rupees)
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