Macquarie has given an 'underperform' rating on Reliance Industries Limited (RIL) while remaining cautious on the stock going ahead. The global brokerage has set a price target of Rs 1,320, implying a nearly 36 per cent downside from Friday's closing price of Rs 2,054 on NSE.
"On a 1-2 year view, we agree with India's long term digital opportunity, but we continue to see meaningful execution challenges and no moat particularly in retail for Reliance, our earnings and cash flow estimates are meaningful," Macquarie Research said in a report.
RIL shares ended the intraday trade today at Rs 1,876, down 178.50 points, or 8.69 per cent compared to previous close. Due to steep fall in RIL stock today, the investors' wealth saw a decline of nearly Rs 1 lakh crore as the total market cap of RIL including partly-paid shares, came down to Rs 13,40,603.5 crore.
"We forecast RIL's FY22 EPS to grow 20% to Rs 73/sh (net income ~Rs495 billion). That said, this is 23% below consensus explained by our view of a slower recovery in Reliance's refining and chemical margins, slower pace of ARPU hikes, lower retail margins as JioMart scales up, high competition in retail, higher working capital for retail, higher capex for JIO and retail, and higher minority interests. Similarly, our FY23 EPS is 18% below," it added.
Meanwhile, Mukesh Ambani led oil-to-telecom behemoth reported a 15 per cent drop in second quarter net profit after a slump in core oil and chemicals business dragged down continued good showing in consumer-facing verticals such as telecom. Net profit stood at Rs 9,567 crore in July-September compared with Rs 11,262 crore a year back.