Reliance Industries, a conglomerate synonymous with India’s economic growth, is poised to announce its Q3 results for the fiscal year 2025. With a portfolio spanning energy, telecommunications, retail, and more, investors and market analysts eagerly await these results to gauge the company’s financial health and strategic direction. This blog delves into the anticipated performance of Reliance Industries, explores its stock movements, and outlines viable options strategies for traders.
Earnings Preview
Revenue and Profit Expectations
As Reliance Industries prepares to unveil its financial performance for the December quarter, experts forecast a moderate increase in revenue and net profit. Consolidated Q3 revenue is expected to hover between ₹2.33-2.37 lakh crore, reflecting a slight quarter-on-quarter rise of 0.5-1%. Year-on-year, revenue might show a growth of 3-5%, compared to ₹2.27 lakh crore in Q3FY24.
Net profit is projected to rise sequentially by 5-8%, landing between ₹17,300-17,900 crore. However, this marks a potential decline from the ₹19,641 crore recorded in Q3FY24. The expected growth is attributed to strong refining margins in the oil-to-chemicals segment and increased Average Revenue Per User (ARPU) in the telecom business, driven by tariff hikes.
Key Business Segments to Watch
- Oil-to-Chemicals (O2C): This segment is likely to see robust performance due to favorable refining margins, which have remained resilient amid fluctuating crude oil prices.
- Telecom: Reliance Jio’s ARPU growth, supported by recent tariff hikes, is anticipated to boost the segment’s revenue and profitability.
- Retail: As India’s consumption story continues to evolve, Reliance’s retail operations are expected to contribute significantly to the overall revenue.
Stock Performance Ahead of Results
Reliance Industries’ stock showed a slight uptick, trading at ₹1,255 on January 16, reflecting a 0.23% increase. Despite a 3.3% gain this month, the stock has underperformed in 2024, declining by 5.96% compared to the NIFTY50’s 8.8% rise.
Technical Analysis
Support and Resistance Levels
Reliance Industries’ stock has faced a downward trajectory, losing over 22% in the past six months from its all-time high in July 2024. It currently trades near a crucial support zone at ₹1,200, which aligns with the 200-weekly EMA. On the daily chart, the stock faces resistance at the 50-day EMA. A breakout beyond these levels could provide traders with clearer directional signals.
Options Market Insights
The options market suggests a potential price movement of ±3.8% for Reliance Industries ahead of its 30 January expiry. The highest call open interest (OI) at the 3,000 strike indicates resistance, while the highest put OI at 1,200 marks a strong support level.
Options Strategies for Traders
Based on the anticipated volatility and market conditions, traders can consider the following options strategies:
Long Straddle Strategy
This strategy involves purchasing both an at-the-money (ATM) call and put option with the same strike price and expiry. It is ideal for traders expecting significant price movement, either upward or downward, exceeding the ±3.8% implied by the options market.
Execution:
- Buy 1 ATM Call Option
- Buy 1 ATM Put Option
Outcome: Profit if the stock moves significantly in either direction, covering the cost of the options.
Short Straddle Strategy
For traders anticipating limited volatility post-earnings, the Short Straddle strategy can be effective. It involves selling both an ATM call and put option, betting that the stock price will remain within a ±3.8% range after the earnings announcement.
Execution:
- Sell 1 ATM Call Option
- Sell 1 ATM Put Option
Outcome: Profit if the stock remains stable, with limited movement in either direction.
Historical Earnings Performance
Analyzing past earnings announcements can provide valuable insights into potential stock movements. Over the last six quarters, Reliance Industries’ share price has exhibited varying degrees of volatility, often influenced by broader market trends and sector-specific developments.
FAQs
1. What is the significance of Reliance’s Q3 results? Reliance’s Q3 results provide insights into the company’s performance across its core segments, influencing investor sentiment and stock price movements.
2. How do options strategies help in trading Reliance’s stock? Options strategies like Long Straddle and Short Straddle allow traders to capitalize on expected volatility or stability in the stock’s price, depending on their market outlook.
3. What factors influence Reliance’s revenue and profitability? Key factors include refining margins, telecom ARPU, retail sales growth, and macroeconomic conditions impacting consumer demand and commodity prices.
4. What are the critical support and resistance levels for Reliance’s stock? The critical support level is around ₹1,200, while resistance is observed near the 50-day EMA. Breaking these levels could indicate future price trends.
5. How can investors benefit from tracking options market data? Options market data, such as open interest and implied volatility, provides clues about market sentiment and potential price ranges, aiding in informed trading decisions.
Conclusion
Reliance Industries’ Q3 results are a pivotal event for investors and traders, offering a window into the conglomerate’s operational and financial health. With robust performance expected in its key segments, the market eagerly awaits the outcomes. Traders can leverage options strategies like Long and Short Straddle to navigate the anticipated volatility. As always, staying informed and adapting strategies to market conditions is crucial for successful trading outcomes.
