Reliance Industries Limited (RIL) shares declined by over 1% after the company posted a 5% drop in net profit for the second quarter. At 12:30 pm, shares of the Mukesh Ambani-led conglomerate were down 1.20% at Rs 2,712.30 on the Bombay Stock Exchange (BSE).
RIL reported a consolidated net profit of Rs 16,563 crore for the quarter ending September, down 5% from the previous year. The decline was largely attributed to softness in the O2C business, which missed estimates and impacted overall profitability.
Motilal Oswal maintained its buy rating on Reliance but adjusted its target price downward, from Rs 3,410 to Rs 3,255. The brokerage trimmed its FY25 and FY26 consolidated EBITDA estimates by 1-2%, while reducing PAT forecasts by 6% and 3%, respectively.
Jefferies, with a target price of Rs 3,400, also acknowledged the weaker-than-expected Q2 results, particularly in the O2C business, along with slight underperformance in both Jio and Retail.
The firm pointed to the anticipated launch of RIL’s new energy operations by March 2025 as a key driver of future growth. Additionally, the potential listing of either the Jio or Retail businesses within the next 12-15 months could provide further upside.
Motilal Oswal also highlighted that Jio is expected to be a major contributor to RIL’s EBITDA growth over the coming years, driven by frequent tariff hikes, market share gains, and the expansion of its home and enterprise businesses.
During its recent AGM, RIL had indicated that its new energy business could add 50% or more to overall earnings in the next 5-7 years, eventually rivalling the profitability of the O2C segment.Analysts believe that this emerging clean energy initiative could generate significantly higher value in the long term.