Reliance Industries marching towards negative return for 1st time in last 10 years

Mumbai, Dec 14
The share of Reliance Industries Limited (RIL) has underperformed in the last three months, and India's largest private firm stock is heading towards negative return for the first time in the last 10 years. 

RIL, which holds an 8 per cent weight in Nifty, has corrected 15 per cent in the last three months. During this period, Nifty was down by 4.9 per cent.

RIL's stock has declined by 2.3 per cent since the start of 2024. This is the first time since 2014 that this stock is giving negative returns on an annual basis.

RIL's stock has been seeing a decline since the company's Annual General Meeting (AGM) held in August. In the AGM meeting, no timeline was given for the monetisation of Reliance Retail and Reliance Jio , due to which investors were very disappointed.

RIL's stock has posted a return of -2.2 percent in September, -9.8 percent in October, -3 percent in November, and -3.9 percent in December.

Apart from this, Reliance Industries is facing heat from multiple levels. The margins of the company's oil-gas and petrochemical business are under pressure. The operationalisation of the New Energy Business, where a large part of the capital expenditure (Capex) is invested, is running behind schedule.

Meanwhile, the average revenue per user (ARPU) of the telecom business is growing at a slower pace than expected due to competition and SIM consolidation. However, the full impact of the tariff hike is yet to come.

RIL is restructuring and consolidating the retail business and that has delayed value unlocking for shareholders.

Apart from this, significant cash flow was expected from the capital expenditure made in the last few years, but due to global headwinds and margins pressure impact, it is below than expected and the company may need debt to fund future capital expenditure.