Reliance Industries downgraded to 'Sell' by MarketsMOJO, despite strong growth and dominant position

Reliance Industries, a largecap company in the oil exploration and refineries industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 21, 2024. This downgrade is based on the company's flat results in September 2024, with its operating profit to interest ratio at a low of 6.49 times and a decrease of -7.5% in PBT less OI. The stock is also currently in a mildly bearish range, with its technical trend deteriorating from sideways on October 21, 2024. The MACD and KST technical factors are also bearish, indicating a potential downward trend for the stock.
In the past year, Reliance Industries has underperformed the market, generating a return of only 19.10% compared to the market's return of 34.48%. However, the company has shown healthy long-term growth with an annual net sales growth rate of 8.94%. It also has a fair valuation with a ROCE of 11.2 and an enterprise value to capital employed ratio of 2.1. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

Despite these positive factors, the company's profits have fallen by -0.6% in the past year, while the stock has generated a return of 19.10%. This could be a cause for concern for investors. However, it is worth noting that Reliance Industries has a high institutional holding of 39.27%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals.

With a market cap of Rs 18,38,721 crore, Reliance Industries is the largest company in the sector and makes up 65.33% of the entire sector. Its annual sales of Rs 924,938 crore also make up 26.93% of the industry. While the company has shown strong growth and has a dominant position in the industry, the recent downgrade by MarketsMOJO suggests caution for potential investors.