Year-Ender 2024: Reliance Industries Shares Set to Give Negative Returns for First Time in 10 Years

Reliance Industries Ltd. (RIL), a powerhouse in India’s corporate landscape, is experiencing a year unlike any other. For the first time in a decade, Reliance Industries shares are poised to end 2024 with negative returns, marking a dramatic shift for one of India’s most dominant conglomerates.

In this article, we delve into the factors behind this historic downturn, analyzing the challenges faced by RIL, its future prospects, and the evolving dynamics of its core sectors, including retail, telecom, and energy.

A Decade-Defining Shift for Reliance Industries Shares

2024 has been a turbulent year for RIL, with its stock performance reflecting the broader challenges faced by the conglomerate. The once steady juggernaut has seen its market capitalization shrink by over ₹4.4 lakh crore since its peak in July. This downturn, coupled with a 21% decline in share value, represents a sharp deviation from its decade-long success story.

How did Reliance Industries, the behemoth synonymous with growth and innovation, arrive at this crossroads? Let’s explore.

Reliance Industries Shares: A Rollercoaster Decade

Reliance Industries has been a pillar of consistency in India’s stock market, delivering stellar returns over the years. Highlights include:

• 2017: A 70.55% surge, fueled by robust earnings and expansion.
• 2018-2020: Sustained growth, driven by strategic diversification.
• 2021-2023: Declining returns, signaling a slowdown with figures of 19.32% in 2021, 7.60% in 2022, and a mere 1.44% in 2023.

In stark contrast, 2024 is expected to end with negative returns, signaling a paradigm shift.

What’s Behind the Decline in Reliance Industries Shares?

Several factors have contributed to the struggles faced by RIL this year:

1. Slowing Earnings and Economic Challenges

A challenging global economic environment has dampened earnings across sectors. RIL’s historically strong performance in refining and petrochemicals is under pressure due to declining demand and competition from rising Chinese exports.

2. Reliance Retail’s High-Base Struggles

Reliance Retail (RR), once a shining star, has faced headwinds, including:

• Weak demand in key segments like fashion.
• High operational costs, exacerbated by inflation.
• Competition from quick-commerce players.

Despite increasing foot traffic, RR’s revenue growth has stagnated.

Reliance Retail: The Backbone Under Pressure

Store Closures and Revenue Stagnation

In 2024, RR closed 1,185 underperforming stores. While the move aims to optimize operations, it reflects deeper issues within the retail giant’s model.

Rise of Quick Commerce (QC)

The meteoric rise of quick-commerce companies like Blinkit and Swiggy Instamart has intensified competition. QC players are eating into market share, particularly in urban centers.

Jefferies’ Optimistic Take

Global brokerage Jefferies remains bullish on Reliance Retail, citing its scale and leadership. It emphasizes the need for transparency and a focus on high-impact growth opportunities.

Telecom and the Threat of Starlink

Reliance Jio, RIL’s telecom arm, has revolutionized connectivity in India. However, competition is heating up:

• Starlink, Elon Musk’s satellite internet venture, is making inroads into India. This poses a threat to Jio’s dominance, particularly in underserved rural areas.

Energy and Sustainability: A Double-Edged Sword

RIL’s energy sector faces dual challenges:

1. Declining global demand for oil-based products.

2. Rising emphasis on renewable energy.

Mukesh Ambani’s ambitious pivot to green energy, while commendable, requires significant capital expenditure and a long gestation period for returns.

Year-Ender 2024: Reliance Industries Shares Set to Give Negative Returns for First Time in 10 Years

This year’s performance highlights the importance of adaptability in a rapidly evolving market. The underperformance of Reliance Industries shares serves as a wake-up call for investors and analysts alike.

Future Prospects: What’s Next for RIL?

Reliance Retail IPO and Growth Challenges

The much-anticipated Reliance Retail IPO has been deferred beyond 2025. Operational inefficiencies and store closures must be addressed before the listing.

Jio IPO in 2025

Reliance Jio is on track for a 2025 IPO. Valued at over $100 billion, Jio remains a crown jewel in RIL’s portfolio.

FAQs About Reliance Industries Shares

1. Why are Reliance Industries shares underperforming?

Key factors include slowing earnings, challenges in the retail segment, and rising competition.

2. Will Reliance Retail’s IPO happen in 2025?

No, the IPO is expected after 2025 due to operational challenges.

3. What is the outlook for Reliance Jio?

Jio remains a strong performer, with its IPO scheduled for 2025.

4. How has Starlink impacted Reliance Jio?

Starlink’s entry adds competition in the satellite broadband market, challenging Jio’s growth.

5. Is Mukesh Ambani’s net worth affected?

Yes, Ambani’s net worth has dropped significantly, reflecting RIL’s challenges.

6. Can Reliance Industries shares recover in 2025?

Recovery depends on addressing current challenges and leveraging opportunities in retail, telecom, and energy.

Conclusion: A Challenging Road Ahead

Reliance Industries, despite its challenges in 2024, remains a cornerstone of India’s corporate world. With strategic pivots in renewable energy and digital platforms, coupled with its retail and telecom potential, RIL is poised for a rebound in the coming years.

The story of Reliance Industries shares is far from over—2024 may be a stumble, but the future holds promise. Investors and stakeholders must watch closely as RIL navigates this transformative phase.