Index heavyweight Reliance Industries was trading down nearly 2 per cent during the day on disappointing results, especially in the oil-to-chemicals and retail businesses both of which dragged down earnings.

The stock opened down with a gap of 28 points at ₹2717.05 and stayed down through the day, dipping to a low of ₹2692.10 intra-day.

The only segment that was firing was Jio Platforms and even there a decline in subscriber base surprised negatively, though ARPUs were better than expected.

On Monday RIL reported a 4.8 per cent annual fall in consolidated net profit in Q2 of FY25 at ₹16,563 crore, while revenue growth was flat at ₹2.4 lakh crore, the growth in digital services offset by weakness in petchem as well as subdued consumer demand, that affected retail performance.

Analysts across broker firms maintained their buy, add, hold recommendations for the stock but with either a reduced target price or a lowering in estimates of EBITDA.

Jefferies maintained its ‘buy’ recommendation on the stock with a price target of ₹3400 but lowered its EBITDA estimates for FY25 and FY26 by 8 per cent and 6 per cent. It summed up the results as a “weak print with large miss in O2C and small misses in Jio and Retail..”.

Nomura has reduced the target price of the stock to ₹3450 from ₹3600 earlier and also cut FY25 to FY27 EBITDA forecasts by 5-6 per cent.

The reduction in estimates factors in lower refining and petchem margins, lower subscribers for Jio and lower revenue growth for retail.

“We note, the near term outlook for refining and petchem markets remains challenging given concerns on global demand and elevated petchem supply, albeit the longer-term outlook for RIL remains constructive, underpinned by the consumer-facing business..,” it said.

The catalysts for the future would be upcoming tariff hikes for Jio as well as value unlocking and sustained growth for retail.

Elara Capital had an ‘accumulate’ recommendation with a reduced price target of ₹3265 (from ₹3636), and it cut EPS for FY25 and FY26 by 14 per cent and 8 per cent, due to lower refining and petchem margins.

A key development that analysts and the market is keenly awaiting is the start of the new energy operations that is expected to take place by March 2025.

Mukesh Ambani made a brief mention of it in the release saying that the first of the new energy giga-factories were on-track to commence production of solar PV modules.

Reliance Retail has built up a massive network across formats and categories, but its results were below par. It net added only 28 stores in the quarter, the overall retail area also declined by nearly 2 million square feet to a little over 79 msf. A closer look at the results showed that the contribution from digital and new commerce was lower.

Systematix was one of the few to raise the target price to ₹3145 from ₹3050 earlier though it cut EBITDA and PAT forecasts for FY25 and FY26.

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