Reliance Industries Ltd., currently India’s largest listed company, is experiencing a significant decline in its stock value, having fallen over 23% from its peak in July of this year. If the stock does not rebound by at least 5% in the remaining five trading sessions of the calendar year, it will not only mark its longest monthly losing streak since the market slump during the COVID-19 pandemic but also end what could have been its tenth consecutive year of positive returns.
Competitors Gaining Ground
As Reliance struggles, two major competitors—Tata Consultancy Services (TCS) and HDFC Bank—are rapidly closing the gap. Earlier this year, HDFC Bank successfully crossed the Rs 1,750 per share mark, a level it had attempted to surpass for nearly three years, and is on track to achieve its 11th consecutive year of gains. Meanwhile, TCS has seen its stock rise over 10% this year, positioning it closer than ever to dethroning Reliance from its top spot.
The renewed optimism surrounding IT companies is largely attributed to favorable macroeconomic conditions, including a global easing of interest rates, particularly following cuts by the U.S. Federal Reserve. HDFC Bank is also expected to benefit from its recent mega-merger with Housing Development and Finance Corporation.
Earnings Projections and Market Sentiment
In contrast, Reliance Industries has seen a decline in consensus earnings estimates for the upcoming fiscal year. Projections for the conglomerate’s earnings per share have dropped by 16% since the beginning of the current fiscal year. Despite these lowered expectations, analysts remain cautiously optimistic, with the consensus price target suggesting an upside of over 30%. This marks the most bullish sentiment towards Reliance’s stock in nearly five years.
As the market dynamics shift, Reliance Industries faces increasing pressure to maintain its position as the leader in India’s corporate landscape, while TCS and HDFC Bank continue to gain momentum.
