Recent Price Movements and Market Performance
Reliance Infrastructure’s stock has been under considerable pressure, hitting a new 52-week low of ₹127.95 on the day. The stock opened with a gap down of 2.19% and continued to slide throughout the trading session, touching an intraday low that represented a 4.98% decline from the previous close. Over the last nine consecutive trading days, the stock has lost nearly 24.71% in value, a stark contrast to the broader market’s modest gains. In the past week alone, the stock has fallen by 17.97%, while the Sensex has remained relatively stable, declining only 0.52% during the same period. This underperformance extends over longer time horizons as well, with the stock delivering a negative return of 56.02% over the last year, compared to the Sensex’s positive 4.04% gain.
Trading volumes have increased notably, with delivery volumes rising by 67.86% on 10 Dec compared to the five-day average, indicating heightened investor activity. However, the weighted average price suggests that most trading occurred near the day’s low, signalling selling pressure. Additionally, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—highlighting a bearish technical outlook.
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Fundamental Challenges Weighing on the Stock
Despite trading at an attractive valuation with a Return on Capital Employed (ROCE) of 3.8% and an enterprise value to capital employed ratio of 0.4, Reliance Infrastructure faces significant fundamental headwinds. The company’s ability to generate returns on capital is weak, with an average ROCE of 4.58%, which is below industry standards. More concerning is the company’s high leverage, reflected in a Debt to EBITDA ratio of 7.32 times, indicating a strained capacity to service debt obligations.
Recent quarterly results have been disappointing. The Profit Before Tax excluding other income for the quarter ending September 2025 stood at ₹962.95 crore, marking a 47.1% decline compared to the average of the previous four quarters. Similarly, the Profit After Tax for the same period fell sharply by 61.1% to ₹402.24 crore. These flat and declining earnings figures have likely contributed to the negative sentiment among investors.
Investor Sentiment and Institutional Participation
Investor confidence appears to be waning, particularly among institutional investors who have reduced their stake by 3.29% over the previous quarter, now collectively holding just 8.36% of the company. Institutional investors typically possess greater analytical resources and tend to react swiftly to deteriorating fundamentals, which may have exacerbated the stock’s decline. The stock’s underperformance relative to the BSE500 index over the past three years, one year, and three months further underscores its challenges in delivering shareholder value.
Long-Term Performance Context
While the stock has delivered an impressive 350.96% return over five years, this performance is overshadowed by recent weakness. The last three years have seen a modest 16.19% decline, contrasting sharply with the Sensex’s 36.40% gain over the same period. This divergence highlights the stock’s struggle to keep pace with broader market indices and sector peers, which may be influencing investor decisions to exit or avoid the stock.
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Conclusion: Why Reliance Infrastructure Is Falling
The decline in Reliance Infrastructure’s share price on 11-Dec is primarily attributable to a combination of weak quarterly earnings, high leverage, and deteriorating investor confidence, particularly among institutional shareholders. Despite its attractive valuation metrics, the company’s poor ability to service debt and flat profit growth have overshadowed these positives. The stock’s consistent underperformance relative to major indices and sector benchmarks has further dampened sentiment, leading to sustained selling pressure and a breach of key technical support levels. Investors should weigh these factors carefully when considering exposure to Reliance Infrastructure, as the current environment suggests continued volatility and downside risk.
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