The fears being expressed in certain quarters about the Reliance share being grossly undervalued have not been borne out by the market movement of RIL stock in recent weeks.
May 17, 2005 (Press Release) --
The fears being expressed in certain quarters about the Reliance share being grossly undervalued have not been borne out by the market movement of RIL stock in recent weeks.
Although the price of RIL share fell from 564.50 on April 1 to 539.10 towards the end of the month, representing a drop of 4.48 per cent, the BSE Sensex index, too, fell 4.94 per cent – from 6605.04 to 6278.50--during this period.
In other words the drop in RIL shares last month was in consonance with the overall market trend and there was no undue erosion in the RIL stock
In fact, the erosion in the share prices of other Reliance companies, namely Reliance Energy and Reliance Capital has been more compared to the flagship company’s stock. The share price of Reliance Capital fell 8.83 per cent during April from 194.25 to 177.10, while that of Reliance Energy registered a drop of 8.53 per cent during the same period—from Rs 540.50 to Rs 494.40—despite a 42.50 per cent jump in net profit. .
It is also noteworthy that the RIL share has since bounced back. On Monday, it was ruling at Rs 540.80. According market analysts, despite the various pulls and pressures, the RIL share is a strong entity. They feel that the company’s fundamentals are strong and the futures are available at a premium.
The strength of RIL shares stems from its presence in the core sectors of the economy, petroleum products and gas, where profits have recently shown an upward trend due to good refining margins. However, these margins are cyclical and depend on several factors, particularly international prices of crude and gas as well as demand.
This means that under any division of Reliance companies, RIL may not necessarily be a plum bargain. On the other hand, Infocomm, being a sunrise industry, has a tremendous scope for expansion, technology up gradation and diversification.
Although the price of RIL share fell from 564.50 on April 1 to 539.10 towards the end of the month, representing a drop of 4.48 per cent, the BSE Sensex index, too, fell 4.94 per cent – from 6605.04 to 6278.50--during this period.
In other words the drop in RIL shares last month was in consonance with the overall market trend and there was no undue erosion in the RIL stock
In fact, the erosion in the share prices of other Reliance companies, namely Reliance Energy and Reliance Capital has been more compared to the flagship company’s stock. The share price of Reliance Capital fell 8.83 per cent during April from 194.25 to 177.10, while that of Reliance Energy registered a drop of 8.53 per cent during the same period—from Rs 540.50 to Rs 494.40—despite a 42.50 per cent jump in net profit. .
It is also noteworthy that the RIL share has since bounced back. On Monday, it was ruling at Rs 540.80. According market analysts, despite the various pulls and pressures, the RIL share is a strong entity. They feel that the company’s fundamentals are strong and the futures are available at a premium.
The strength of RIL shares stems from its presence in the core sectors of the economy, petroleum products and gas, where profits have recently shown an upward trend due to good refining margins. However, these margins are cyclical and depend on several factors, particularly international prices of crude and gas as well as demand.
This means that under any division of Reliance companies, RIL may not necessarily be a plum bargain. On the other hand, Infocomm, being a sunrise industry, has a tremendous scope for expansion, technology up gradation and diversification.
Email
Print
SPAM
