Japanese brokerage firm Nomura downgraded the rating of Reliance Industries shares. Nomura said it downgraded the company’s rating from “BUY” to “neutral” in view of the delay in the telecom tariff hike and the recent jump in valuations. Nomura has downgraded this rating at a time when the company is about to announce its second quarter results in a few days.
However, the brokerage firm also said that the outlook for key businesses of Reliance Industries has improved. But at the same time, it also believes that the valuation of the company is looking a bit high after the recent rally. According to a Bloomberg report, Nomura has downgraded the rating of Reliance Industries for the first time in many years.
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Nomura analysts Anil Sharma and Aditya Bans said in their note issued on October 18, “The outlook for almost all operating businesses of Reliance Industries is improving. At the same time, we see the company’s entry into the energy segment with a positive outlook.” However, despite this, we believe that the recent sharp rise in the valuation of the company has made it costlier. We expect the stock to remain marginally higher for some time. Hence, we downgrade the rating of the stock from “BUY” to “Neutral”. are.”
Nomura has slashed its EBITDA estimates for FY2022 and FY2023 by 10% and 6%, respectively, based on delay in telecom tariff hikes and weak performance in the first half of 2021. The stock market is trading at an all-time high these days. During this, there has also been a lot of jump in the shares of Reliance Industries. However, during the first six months of 2021, the stock traded almost in a narrow range and underperformed the Nifty index.
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However, since the last three months, Reliance Industries’ shares started rallying and gave a return of 28%, while the return of Nifty was only 12% during this period. The stock of Reliance Industries has jumped 35% in the year 2021, while the Nifty has gained 28% during this period.
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