Tuesday, January 06, 2015

Reliance Industries Ltd - The Consistent Underperformer

The post title says it all. Following table and charts highlight the point.

PeriodAbsolute Nifty ReturnAbsolute RELI.NS return
Last 5Y55.98%-22.89%
Last 3Y70.95%16.52%
Last 1Y29.57%-5.03%

The 1Y and 5Y charts from Yahoo! Finance pictorially show the same information as in the table:
RIL vs Nifty 1Y

RIL vs Nifty 5Y

The above table and charts infer just one thing: Reliance Industries Ltd (RELI.NS)  has under-performed Nifty on a consistent basis and it is no surprise the stock is continuing to do so this year as well.  It is important to note that Reliance Industries itself is a member of Nifty with a weighting of close to 5% now - this would make the returns of Nifty Index outside RIL to trump RIL even more than the numbers as indicated in the table above.

There are quite a few investors (read: mutual funds; LIC itself holds close to 8%) who are long this stock and consistently so, wonder how they justify their positions.

This is what Udayan from CNBC had to say

Update: Just a day after I publish this post, Mint Newspaper came up with an article on Reliance Industries: RIL shares lag Sensex for Seventh Consecutive Year

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