Reliance Industries Faces Potential Negative Returns for the First Time in a Decade
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Mumbai, Dec 13 (NationPress) The stock of Reliance Industries Limited (RIL) has significantly underperformed over the past three months, positioning India's largest private sector company on a path to record negative returns for the first time in the last decade.
RIL, which contributes an 8 percent weight to the Nifty, has experienced a 15 percent decline in the last three months, while the Nifty index has decreased by 4.9 percent during the same timeframe.
Since the beginning of 2024, RIL's stock has dropped 2.3 percent. This marks the first occasion since 2014 that the stock is generating negative annual returns.
The decline in RIL's stock can be traced back to the company's Annual General Meeting (AGM) held in August, where no specific timeline was provided for the monetization of Reliance Retail and Reliance Jio, leading to considerable investor disappointment.
In detail, RIL's stock has recorded returns of -2.2 percent in September, -9.8 percent in October, -3 percent in November, and -3.9 percent in December.
Moreover, Reliance Industries is grappling with challenges from multiple fronts. The margins from the company's oil-gas and petrochemical sectors are under pressure. Additionally, the rollout of the New Energy Business, which has absorbed a significant portion of capital expenditure (Capex), is falling behind schedule.
Meanwhile, the average revenue per user (ARPU) in the telecom sector is growing at a slower than anticipated rate due to heightened competition and SIM consolidation, with the full effect of the recent tariff increase still pending.
RIL is currently restructuring and consolidating its retail business, which has delayed the unlocking of value for shareholders.
Furthermore, the substantial cash flow that was anticipated from the capital investments made in recent years is underwhelming due to global challenges and margin pressures, which may necessitate the company to incur debt to support future capital expenditures.
