BENGALURU (Reuters) – Shares of Reliance Industries fell as much as 3% after the conglomerate reported first-quarter profit below analysts’ estimates on Friday, hurt by weak performance in its energy and retail segments.
India’s most valuable company’s results were predominantly hurt by lower margins on fuel sales, while sluggish discretionary spending dragged retail division’s performance.
The fashion and lifestyle segment was hit by lower demand distribution, V Srikanth, the company’s chief financial officer, said in a call on Friday.
Retail revenue growth reflects a continuation of a slowing trend seen from last quarter despite higher footfalls, Ambit Capital analysts said in a note.
The retail segment’s 7% revenue growth came below several analysts’ expectations.
Retail still faces a lack of support from the macro environment, while the oil-to-chemicals segment will likely remain lacklustre given weak margin environment and new refining capacities being commissioned, HSBC analysts said in a note.
Reliance shares are up 17.6% so far this year, compared with 13% gains in the NSE Nifty 50 index
Moderated capex in the first quarter coupled with retail’s sluggishness would lead investors to keep their optimism in check, Ambit analysts said.
Oil-to-chemicals earnings in this fiscal are expected to remain muted considering the weaker first quarter and uncertain margin environment over the rest of the year, ICICI Securities said in a note, adding that could weigh on overall earnings of the company.
(Reporting by Sethuraman NR in Bengaluru; Editing by Eileen Soreng)
