Market capitalization of Reliance drops below Rs 15 trillion; shares down 9% in six days

Reliance Industries Limited (RIL) shares have been on a downward trend in the past few days. The market capitalization (m-cap) of the company has dropped below Rs 15 trillion for the first time in six days. RIL shares have lost 9% in the past six days.

The sell-off in RIL shares started after the company reported a disappointing set of earnings for the quarter ended March 31, 2019 (Q4FY19). RIL’s Q4FY19 net profit came in at Rs 10,362 crore, which was lower than the Rs 10,602 crore that analysts had expected.

The earnings miss was largely due to a sharp increase in the company’s expenses. RIL’s expenses in Q4FY19 rose by 21.6% to Rs 1.33 trillion. This was primarily due to a jump in the company’s marketing and distribution expenses, which rose by 41% to Rs 10,292 crore.

The sharp increase in marketing and distribution expenses was due to the launch of Reliance Jio’s broadband service, JioGigaFiber. RIL incurred heavy expenditure on the rollout of JioGigaFiber in the quarter.

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