Reliance industries shares surge 5% on strong Q3 profit boosted by retail growth

Reliance Industries shares rise nearly 5%, poised for best week in six months after beating profit estimates due to strong retail performance

Shares of Reliance Industries rose nearly 5% on Friday and were set for their best week in six months, as the company beat quarterly profit estimates on a boost from its retail business, which had dragged the stock's performance in 2024.

Reliance Industries' shares increased by about 5% on Friday, setting the stage for its greatest week in six months. The company's retail division, which had hampered the stock's performance in 2024, helped it surpass quarterly earnings projections.(REUTERS/Dado Ruvic)

Reliance, India's most valuable company and the second-top heavyweight stock on the benchmark Nifty 50 index, was last up 2.2% and has gained 3.4% this week.

The Nifty fell 0.9% on the day and is down 1.4% for the week.

"Reliance is back on a growth path after six months of challenges," Morgan Stanley said in a note, adding that "the risk of earnings downgrades" would unwind.

Late on Thursday, the Mukesh Ambani-led conglomerate reported a bigger-than-expected third-quarter profit as festive demand boosted the retail segment, while tariff hikes and 5G consumption drove the telecom business.

At least six brokerages raised their ratings on the "buy"-rated stock after results, while four raised price targets, as per data compiled by LSEG.

Better-than-expected performance at Reliance's retail unit is likely to support the stock in the near-term, analysts at J.P.Morgan said, adding that the stock could reverse its recent decline.

Reliance shares fell about 6% in 2024, their first annual drop in a decade on worries over falling refining margins and growth worries in the retail segment.

"We are enthused by the strong performance in the third quarter, especially in retail, where softness in this segment has been a key drag on stock performance and investor sentiment, which we believe should now reverse," Citi analysts said in a note.