Shares of Reliance Industries, India’s largest company by market value, surged nearly 5% on Friday following its robust third-quarter performance. This marks its best week in six months, driven by stronger-than-expected growth in its retail and telecom businesses.
Key Highlights
Reliance Industries reported a bigger-than-expected profit for the third quarter, primarily fueled by festive demand that boosted its retail segment. Additionally, tariff hikes and growing 5G consumption contributed significantly to the company’s strong financial performance.
As of Friday, Reliance shares gained 2.2%, bringing the weekly rise to 3.4%. In contrast, the Nifty 50 index, where Reliance is the second-largest heavyweight, fell by 0.9% on the day and 1.4% over the week.
Recovery from 2024 Challenges
Reliance Industries faced a challenging year in 2024, with its shares declining by approximately 6%—the first annual drop in a decade. Concerns over falling refining margins and a slowdown in retail growth had impacted the company’s performance.
However, analysts now believe the third-quarter results signal a strong recovery. “Reliance is back on a growth path after six months of challenges,” noted Morgan Stanley, adding that the risk of earnings downgrades has subsided.
Retail and Telecom Drive Growth
The retail division, which had weighed down investor sentiment in 2024, emerged as a key growth driver this quarter. Festive demand played a significant role in revitalizing the segment. Meanwhile, Reliance Jio, the company’s telecom arm, benefited from tariff hikes and increased 5G adoption, further bolstering earnings.
“We are particularly encouraged by the strong performance in retail, which had been a major drag on stock performance. This turnaround should restore investor confidence,” Citi analysts commented in a note.
Market Reactions and Analyst Upgrades
Reliance’s impressive quarterly results prompted at least six brokerages to reaffirm their “buy” rating on the stock. Four brokerages also raised their price targets, as per data compiled by LSEG.
Analysts at J.P. Morgan observed that the better-than-expected retail performance is likely to support the stock in the short term. They added that this could help reverse the recent decline in share prices.
Investor Sentiment on the Rise
Reliance’s strong Q3 performance has injected renewed optimism into the market. As India’s most valuable company, its turnaround is expected to have a ripple effect on investor sentiment, especially given its significant weightage in the Nifty 50 index.
Conclusion
With a robust recovery in its retail and telecom businesses, Reliance Industries has proven its resilience and ability to navigate challenging market conditions. The company’s third-quarter results not only surpassed expectations but also set the stage for sustained growth in the coming quarters.
As investor confidence grows, Reliance is well-positioned to reclaim its upward trajectory, making it a stock to watch in the near term. Stay tuned for more updates on India’s top-performing companies.
