Reliance Industries Shares Rally 12% After September Quarter Profit Jumps 40%, Adding Over $19 Billion In Market Value

Reliance Industries shares jumped nearly 12% on Monday, adding more than $19 billion to its market value in the biggest single-day gain recorded by an Indian company. The rally followed better-than-expected September quarter earnings and coincided with a major shift in analyst sentiment. For the first time since 2017, none of the analysts tracking the company have a sell or hold recommendation on the stock.

Why Did Reliance Industries Shares Rally?

By Monday's close, Reliance Industries shares were trading at ₹1,300, up nearly 12% for the day. This was its biggest single-day jump since April 2020. On Tuesday, the stock opened slightly lower (1.28%) at 9:44 AM.

The stock had been struggling for much of the year, losing over 20% before Monday's rally as investors grew cautious about growth, especially in its retail business.

However, Reliance Industries’ Q2 results helped change that outlook. The company's net income rose more than 40% year-on-year to ₹25,550 crore in the September quarter, beating the average analyst estimate of ₹21,367 crore.

Strong refining margins played an important role in the improvement. Diesel refining margins remained close to historic highs amid tight global supplies and disruptions linked to the Middle East conflict.

Jio Platforms, in which Reliance holds a 64.5% stake, also reported a 14% increase in profit. Its recent listing, the largest-ever by an Indian company, further strengthened the group's market position.

What Is Driving The Change In Analyst Sentiment?

Reliance now has 32 buy recommendations and no hold or sell calls, according to data compiled by Bloomberg. This marks the first time in nearly a decade that all analysts tracking the company have a positive or buy-equivalent view.

The change comes after months of concerns over the company's earnings growth and valuation. Before the recent rally, Reliance's stock decline had pushed its valuation towards multi-year lows.

Analysts believe the discount attached to Reliance's stake in Jio Platforms could narrow over time. The current holding company discount of around 80% is considered unusually high for a company of Reliance's size.

Reliance Retail remains an area of concern. Its revenue increased by only 1.3% compared with the same quarter last year, while the company's quick-commerce business continues to expand. The push into this segment is also weighing on margins.

The next few quarters will be important in determining whether retail can regain its growth pace. For now, the improvement in refining and petrochemical earnings is giving investors a reason to take another look at the stock.

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