Significant Decline in RIL Shares

Reliance Industries (RIL) shares have witnessed a dramatic 25% drop from their peak, erasing Rs 5.4 lakh crore in value. This downturn is attributed to foreign institutional investors' selling amidst a retail slowdown and weak refining margins.

Recovery and Valuation Concerns

Recent sessions have shown a 4% recovery in RIL shares, suggesting possible value buying at lower levels. However, the sustainability of this recovery is uncertain. Jefferies analysts believe the current valuations are excessively negative and maintain a 'Buy' recommendation with a Rs 1,660 target.

Positive Factors and Future Projections

Positive factors for RIL include potential tariff increases, Jio's listing prospects, and improvement in the O2C business. Jio's outlook remains positive, with projected revenue and EBITDA CAGR for FY25-27. Kotak Institutional Equities has upgraded their rating to 'Buy' with a Rs 1,400 target price, anticipating gradual retail sector improvement.

Challenges and Investor Sentiment

Despite the challenges, RIL's current valuation might present an opportunity, considering the extensive negative sentiment already reflected in prices. The recent 4% increase in share price indicates renewed investor interest, though uncertainty remains about the sustainability of this recovery.