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Reliance shares have been under pressure due to sharp earnings cuts in FY25, driven by weaker refining and petrochemical margins, said the brokerage. These commodity-linked businesses, which once made up nearly 44% of EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation), now account for only a third.
JP Morgan said earnings revisions have mattered for the stock’s performance. In the past, Reliance’s relative returns have tracked changes in Nifty EPS (earnings per share) expectations. While some estimate cuts are still possible, the firm sees limited downside and does not expect a repeat of FY24’s underperformance.
Reliance shares are up 18% so far in 2025 against the 4.3% gains in Nifty.
JP Morgan said the retail business remains key to the conglomerate’s valuation, contributing 46% of the brokerage’s sum-of-the-parts (SOTP) model.
“Even though retail is a small part of earnings currently, it trades at high implied valuations,” said the brokerage. “An improvement in growth outlook here could drive multiples up; which would have a bigger stock impact than commodity upside.”
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https://economictimes.indiatimes.com/markets/stocks/news/jp-morgan-stays-overweight-on-ril-cites-better-outlook/articleshow/121661312.cms
