Reliance Industries shares slip 3%; stock hits over 15-months low

Shares of Reliance Industries (RIL) hit an over 15-month low of Rs 1,161.40, as they slipped 3 per cent on the BSE in Monday’s intra-day trade extending its fall on the bourses on a sharp sell-off in equities. Since February 4, the stock price of the country’s most valued company in terms of market capitalisation has slipped 10 per cent. Currently, RIL is trading at its lowest level since November 13, 2023.

 

In the past six months, RIL has underperformed the market by falling 22 per cent, as compared to the 11.5 per cent decline in the BSE Sensex.

 

 

According to a Bloomberg report, a unit of billionaire Mukesh Ambani-led Reliance Industries, risks being penalised after failing to set up a battery cell plant that formed part of Indian Prime Minister Narendra Modi’s push to cut import dependence.

 

Reliance New Energy Ltd., among companies that won a bid for battery cell manufacturing in 2022 under an Indian government plan to reward local production, is liable to pay fines of as much as Rs 125 crore ($14.3 million) for missing a deadline, Bloomberg reported quoting people familiar with the matter. CLICK HERE FOR REPORT  RIL has strategically invested in ten global technology innovators across new energy verticals. These companies have a strong expertise that shall assist RIL accomplish its new energy vision. RIL aims to be one of the world's leading new energy and new materials companies as part of its 15-year vision.

 

To facilitate solar power’s success in the energy landscape, robust energy storage facilities with stationary batteries is the need of the hour. RIL is in the process of constructing an integrated battery giga-factory with 30GWh capacity; likely to be commissioned by H2CY25. 

 

Subsequently, it plans to integrate backwards to cell manufacturing and battery chemical manufacturing, too. With access to talent including from subsidiaries LithiumWerks, and Faradion, RIL has a strong team of nearly 150 technologists committed to delivering next-generation batteries and storage solutions that focus on safety, stability, and reduced lifecycle costs, Nuvama Institutional Equities had said in the company's December quarter (Q3) results update.

 

Meanwhile, RIL has underperformed the broader benchmark equity indices over the past few years and delivered negative returns in CY24, a first in the past 10 years. Analysts at Motilal Oswal Financial Services (MOFSL) believe RIL’s recent underperformance has been driven by continued earnings downgrades due to growth moderation in Reliance Retail and weak refining and petchem cracks.

 

After the steep correction, the brokerage firm in its January 2025 report, said that they believe the risk-reward is compelling as RIL now trades at MOFSL’s bear case valuation – Reliance Jio at 10 per cent discount to Bharti’s current valuation, high-single-digit growth in core retail revenue/ Ebitda and no improvement in oil-to-chemicals (O2C) earnings over FY24- 27E.

 

RIL’s New Energy business is reaching a transformative milestone marked by the start of phase I of solar module manufacturing capacity in Q4FY25. This will be followed by the commencement of operations in cell manufacturing and phase II of module manufacturing in the next two quarters.

 

The brokerage firm expects capex intensity to pick up pace in the New Energy segment over the next few years. However, MOFSL anticipates New Energy investments to be largely funded by robust cash flow in the standalone business.

 

Overall, analysts model an annual consolidated cash capex of Rs 1.25-1.3 trillion for RIL as a moderation in RJio capex is likely to be offset by higher capex in New Energy. However, the brokerage firm believes the peak of capex is likely behind, which should lead to FCF generation (~Rs 90,000 crore cumulatively over FY24-27) and a reduction in consolidated net debt.