Reliance Industries (NSE: RELIANCE) is poised to close today’s trading session with a price loss of 2 percent. The bearish trend will be an extension of the past two sessions which had resulted in a 3 percent drop in value. However, despite the drop, the current company’s fundamentals is looking likely to change the tide that has seen the company dropping 3 percent of its value since the year started.
Reliance Industries Positive Fundamentals
Reliance Industries, one of India’s largest conglomerates, is making a push into the fast-moving consumer goods (FMCG) market. In a regulatory filing submitted to the Registrar of Companies, the company announced plans to establish a fully-integrated FMCG company with ambitions to compete in nearly every market segment. The newly-floated FMCG flagship, Reliance Consumer Products (RCPL), plans to enter the market for domestic, household, and consumer goods, including education, raw, processed, and commercial items; pharmaceuticals; food and beverage products; agricultural and non-agricultural produce; and commodities.
The filing also highlighted the company’s determination to give equal importance to the backend sourcing strategy. Reliance plans to engage in all agricultural and related activities, such as planting and crop-raising, to have full control over backend sourcing. It also intends to focus on dairy-based, agro-based products and animal husbandry.
Reliance Push into FMCG Marktets
Reliance’s push into the FMCG market comes amid rapid growth in the consumer goods sector in India. The company is already the country’s largest retailer through its Reliance Retail subsidiary, and the move into FMCG is seen as a natural extension of its existing operations. The company has already begun preparatory arrangements for the new venture and has appointed a panel of four directors to oversee the plans. The panel includes V Subramaniam, Managing Director of holding business Reliance Retail Ventures Ltd; T Krishnakumar, formerly of Coca-Cola; US-based management scholar Dipak C. Jain; and K Sudarshan, Managing Director of EMA Partners India. The Managing Director of RCPL has yet to be announced.
In recent weeks, RCPL has announced two transactions, including a 50 percent investment in soft drink manufacturer Sosyo Hajoori Beverages and a 51 percent stake in the Lotus Chocolate Company, with plans to purchase up to 26 percent more through an open offer. Additionally, the company plans to market the Campa soft drink brand, which it recently acquired. Last month, it debuted the FMCG brand Independence in Gujarat.
Reliance Industries also announced that it’s its subsidiary Reliance Jio Infocomm will invest an additional Rs 2,500 crore to deploy 5G network services in Assam. Currently, the company’s investment in the state is Rs 9,500 crore. Furthermore, its arm Reliance Jio Infocomm has invested Rs 40,446 crore as it expanded its footprint in Tamil Nadu with the unveiling of True 5G services in five cities. The company on Wednesday rolled out 5G services in Coimbatore, Madurai, Tiruchirappalli, Salem, Hosur and Vellore in addition to the facility already being available in Chennai. Jio Launched True 5G in Uttarakhand, the first and the only operator to launch 5G services in Uttarakhand.
Reliance Stock Price Forecast 2023
Reliance Industries’ move into the FMCG market is the latest in a series of bold moves by the company. The company is also making a big push into the digital space through its Jio Platforms subsidiary and has recently made significant investments in the retail and technology sectors. The company’s push into the FMCG market is expected to bring new opportunities and additional employment and will also enable citizens and the government to remain connected on a real-time basis.
Therefore, based on the above fundamentals of the company, my 2023 price forecast for the company expects it to continue growing. In the next few weeks, there is a high likelihood we might see its value recovering from last year’s losses.