Reliance Industries shares extend losses after Morgan Stanley’s downgrade; firm loses Rs 88,000 crore in mcap

Shares of billionaire Mukesh Ambani-led Reliance Industries extended losses on Thursday, after global firm Morgan Stanley downgraded the stock. RIL share price tanked by more than 3% to hit the day’s low at Rs 1,259.15. Notably, the shares have lost more than 10% this week alone, taking the overall mcap loss to more than Rs 88,000 crore in the period.

In the latest Jan-Mar period, the oil-to-telecom conglomerate reported a drop in standalone net profit for the first time in 17 quarters. Reliance Industries net profit came in Rs 10,362 crore. The firm’s gross refining margin (GRM) — a key metric of its profitability from turning crude oil into petroleum products — also came in lower at $8.2 per barrel, compared to $8.8 per barrel in the previous quarter.

Taking stock of the reported results, global firm Morgan Stanley said that is expects the 2-year earnings upswing to reverse. The rising glut in gas and polyester could also slow down in 2020. The upside appears limited amid core business drags, noted Morgan Stanley in the report. The firm has downgraded the stock to equal-weight with a target price of Rs 1,349. Notably, the stock has seen a lower grade after 2 years of outperformance. “We expect Reliance Industries earnings growth to halve in FY20, after a 17% CAGR in FY17-19,” Morgan Stanley said in the report.

Interestingly, the shares had hit a fresh record record high last week, taking the firm just inches away from hitting the Rs 9 lakh crore mcap mark. However, since then, the shares have corrected by nearly 10% eroding the firm’s market cap to the current level of 8.08 lakh crore.

Reliance Industries Limited (RIL)