JP Morgan underweight on RIL, says upstream outlook cloudy

JP Morgan's re-initiated coverage of Reliance Industries, India's biggest energy conglomerate, with an "underweight" rating and a price target of Rs 650 citing a lack of earnings growth and high valuations.

[caption id="attachment_274718" align="alignleft" width="380" caption="Reliance shares have risen 7.3 percent year to date, heavily under-performing the 13.7 percent gain in India's 50-share Nifty index. Reuters"][/caption]

The investment bank added it had a "negative" outlook on Reliance's refining and petchem businesses, while "sustained" weakness in its downstream business would cause earnings downgrades.

JPMorgan added Reliance's upstream outlook was "cloudy," saying it expected natural gas production to decline in the near-term.

Reliance shares have risen 7.3 percent year to date, heavily under-performing the 13.7 percent gain in India's 50-share Nifty index. The stock, however, is up 1.5 percent at Rs 754 in early trade today.

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Reuters