Why is Reliance stock not performing well?

• Follow

The stock of the country’s giant business organisation – Reliance Industries (RIL) – is not performing as expected. Sensex and Nifty have given returns of more than three percent in the last one year. During this period, the share of RIL, the country’s largest company in terms of market cap, has weakened by more than 14 percent. However, the company’s 2022-23 fourth quarter results were as expected. In the fourth quarter, the company’s net profit grew by 19 percent to a record Rs 19,299 crore. During this period, RIL’s income climbed by 2.8 percent to Rs 2.39 lakh crore.

What is the reason?

There are many reasons for the weakness in Reliance’s stock, but the biggest reason is believed to be that the company has not yet separated its retail and Jio business. Last year, the company had announced the separation of its financial business, which is yet to be completed. This time, while releasing the results, the group has again said that this year it will separate the financial business under any circumstances.

What do experts say?

Regarding RIL stock, market expert PK Aggarwal says that the fundamentals of the company are good but the future holds many challenges. While investing in any stock, big investors look at the valuation of the company – at which levels the stock should be bought. But Reliance has now entered so many businesses that investors are unable to  decide on what basis its valuation should be done.

Aggarwal says that if one needs to find out the value of a footwear company, it is easier to do Bata’s valuation but how can one compare it with Reliance? Similarly, it is easy to do valuation of Bharti Airtel in the telecom sector, but it is difficult to value Jio. That’s why big investors and fund houses are avoiding making new investments in the company. As a result, RIL stock is continuously underperforming.

What should investors do?

 Aggarwal says that this stock must be in the portfolio of every investor. It gives protection to your portfolio. Keep investing little by little from a long-term perspective. If the company restructures its business in future, then investors will get its benefit. On April 26, RIL shares closed at Rs 2,362 on BSE, down 0.55 per cent. Investing at the current level, this stock can give a return of up to 10 percent in the next one year.

Watch the below footage to know more on this: