Reliance Entry done @ 1425Reliance Industries Ltd (RIL) shares are experiencing a decline, currently trading around ₹1424-1425. This recent dip comes despite the company reporting robust Q1 FY26 results with a significant 78% year-on-year rise in consolidated net profit to ₹26,994 crore, largely driven by a one-time gain from the stake sale in Asian Paints.
Current Scenario and Key Observations:
* Falling Price: The stock has seen a considerable fall in the past few days, with reports indicating a crash of around 2.7% on BSE today, and a drop of over 6% in July so far.
* Q1 FY26 Performance:
* Net Profit: RIL reported its highest-ever consolidated net profit of ₹26,994 crore for Q1 FY26, significantly beating market estimates.
* Revenue: Revenue from operations increased by 5.3% to ₹2,48,660 crore.
* EBITDA: Consolidated EBITDA jumped 36% to ₹58,024 crore, with EBITDA margin improving to 21.2%.
* Segmental Performance:
* Jio Platforms: Reported a strong 23.9% YoY increase in EBITDA, driven by ARPU growth and operational efficiency. Jio has also surpassed 200 million 5G subscribers.
* Reliance Retail: Posted an 11.3% YoY increase in revenue, though some reports indicate a slowdown in consumer electronics sales and space addition lagging expectations.
* Oil-to-Chemicals (O2C): Saw a slight revenue decline due to weaker crude prices and planned maintenance, but EBITDA climbed due to improved transportation fuel margins.
* Analyst Outlook: Despite the recent fall, many major brokerages have maintained "Buy" or "Overweight" ratings on RIL, with target prices generally ranging from ₹1500 to ₹1767. They remain sanguine about RIL's long-term growth prospects, especially in the New Energy segment, Jio, and Retail.
* Growth Drivers:
* New Energy: RIL is heavily investing in the new energy sector, with plans to commission giga-factories for solar PV, fuel cells, and batteries over the next 4-6 quarters, aiming for a self-funded platform and perpetual growth.
* Digital Services: Continued expansion and growth in Jio Platforms, including 5G deployment and broadband connections.
* Retail Expansion: Ongoing growth and diversification within the retail segment.
* Debt: While the net profit was record-breaking, net debt has slightly increased, reflecting capex intensity in digital infrastructure, new energy, and retail expansion.
Investment Consideration with Stop Loss:
Given the current falling price at ₹1424 and your stated stop loss limit of not more than 5% of your total portfolio, this indicates a cautious approach. While the stock has corrected, many analysts see this as a potential buying opportunity due to strong fundamentals and future growth drivers, especially in the New Energy and Digital segments.
However, it is crucial to consider:
* Volatility: RIL stock is currently exhibiting some volatility.
* Market Sentiment: The broader market conditions and immediate investor reaction to the Q1 results seem to be weighing on the stock despite the strong underlying performance.
* Risk Management: Adhering to your 5% portfolio stop loss is a prudent strategy to mitigate potential downside risk in a volatile market.
