Reliance Industries received a shock, CLSA and Edelweiss downgraded the stock due to cost overruns in 2020
The stock of Reliance Industries, which is constantly making new records, has received a major setback. It is also predicted that the stocks of RIL may pause for a while. It is reported that it has been downgraded by CLSA and Edelweiss Brokerage House. This decision could have a negative impact on the company’s stock in the coming days.
Edelweiss reduced the target to Rs 2,105
Edelweiss downgraded Reliance Industries’ stock to hold rating. Its price target has also been increased to Rs 2,105. Whereas CLSA downgraded the stock to outperform rating on buy rating. However, its target has been increased to Rs 2,250. The reason for this downgrade is the high valuation of Reliance Jio and Reliance Retail. Both brokerage houses have said that the valuation of Reliance Industries Ltd (RIL) stock is very high. This should be critically noted.
The share increased two and a half times from March’s level
Let us know that RIL’s stock has increased more than two-and-a-half times from the March low of Rs 867.82. The stock reached Rs 2,188 on Tuesday. On Monday it had gone up to Rs 2,198. The market capitalization of the company has also gone up to Rs 13.78 lakh crore. This is almost 55 percent more than the level of March. RIL had raised more than Rs 1.5 lakh crore by selling about a 33 percent stake in the Jio platform. Facebook and Google have primarily invested in this. Both have invested 77 thousand crores for a 17 percent stake.
The stock is trading at a PE of 47.2.
Edelweiss had described the stock as positive in 2016 and after four years the stock has grown significantly. RIL is currently trading at a PE of 47.2 on trailing 12 months. It is claimed to be quite expensive until now. So far, all the brokers who had advised to buy it have exceeded the target.
CLSA reports outperformance
CLSA has set a new target of Rs 2,250. The foreign brokerage house estimates that the company’s market capitalization by March 2022 could be $ 220 billion. However, the rally in the stock may stop for some time. By the way, tell that this stock is at a very expensive level. Also, the June quarter results are likely to be poor. The company had earlier said that it would release its results on July 23 on the exchange. Later it has been extended to 30 July.
Thursday is 30th July and the expiry is on this day only. In such a situation, it is believed that the company’s result will be bad and the shares will be under pressure.
Retail was in bad shape due to lockdown
The company’s retail business has suffered badly due to the lockdown in the last three months. However, its refinery margin has also been affected by the shortage of crude oils. Overall, when the results of the company deteriorate, there will be pressure on the shares. Therefore, in the coming time, its stock can break down from the current level and go down considerably. However, the rise in shares recently has been seen by the sale of Jio’s stake. But now the company has no major announcement except to sell its stake in retail.