Reliance Industries Upgraded to 'Hold' by MarketsMOJO, Despite Flat September Results

Reliance Industries, a largecap company in the oil exploration and refineries industry, has recently been upgraded to a 'Hold' by MarketsMOJO on October 17, 2024. This upgrade is based on the company's healthy long-term growth, with an annual net sales growth rate of 8.94%. However, the technical trend for the stock is currently sideways, indicating no clear price momentum.
Despite this, the stock is trading at a discount compared to its average historical valuations and has a fair valuation with a 2.1 enterprise value to capital employed. In the past year, the stock has generated a return of 15.19%, but its profits have fallen by -0.6%.

One of the reasons for the upgrade to 'Hold' is the high institutional holdings at 39.27%. These investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors. Additionally, Reliance Industries is the biggest company in the sector with a market cap of Rs 18,32,254 crore, constituting 64.99% of the entire sector. Its annual sales of Rs 924,938 crore make up 26.98% of the industry.

However, the company's results for September 2024 were flat, with the lowest operating profit to interest ratio at 6.49 times and a fall of -7.5% in PBT less OI. This has led to underperformance in the market in the last year, with a return of 15.19% compared to the market (BSE 500) return of 33.11%.

Overall, while Reliance Industries has shown healthy long-term growth and has a strong presence in the industry, its recent financial results and technical trend suggest a 'Hold' recommendation for investors.