Reliance shares have been beneath strain resulting from sharp earnings cuts in FY25, pushed by weaker refining and petrochemical margins, mentioned the brokerage. These commodity-linked companies, which as soon as made up almost 44% of EBITDA (Earnings Earlier than Curiosity, Tax, Depreciation, Amortisation), now account for less than a 3rd.
JP Morgan mentioned earnings revisions have mattered for the inventory’s efficiency. Up to now, Reliance’s relative returns have tracked adjustments in Nifty EPS (earnings per share) expectations. Whereas some estimate cuts are nonetheless potential, the agency sees restricted draw back and doesn’t anticipate a repeat of FY24’s underperformance.
Reliance shares are up 18% thus far in 2025 in opposition to the 4.3% beneficial properties in Nifty.
JP Morgan mentioned the retail enterprise stays key to the conglomerate’s valuation, contributing 46% of the brokerage’s sum-of-the-parts (SOTP) mannequin.
“Although retail is a small a part of earnings presently, it trades at excessive implied valuations,” mentioned the brokerage. “An enchancment in development outlook right here may drive multiples up; which might have a much bigger inventory affect than commodity upside.”
