Reliance Industries (RIL) stock has been underperforming the market for a while now. One of the reasons of this under performance of RIL stock is because the shareholders of Reliance Industries are unhappy or say they are upset. They are upset about the fact that Reliance has been heavily investing into other sectors apart from oil and gas. The most recent purchase of 14% stake in EIH, the hotel business and Reliance’s interests in getting into Hospitality sector is making RIL shareholders to exit the stock.

Reliance’s Purchase In EIH

One of the shareholders who was holding Reliance for last several years sold it on hearing the news of the purchase of 14% stake in hotel sector. They said that this purchase of Reliance is crap and will be bad for the company and so they are upset for this 1000 crores waste investment and they exited from the stock. Several others followed the same and exited from the stock thinking Reliance is going down. They completely forgot about the investment in Shale Gas in USA which is pretty much an oil and gas sector investment.

The purchase of 14% stake in EIH was hardly a 1,000 crore investment for Reliance Industries. 1000 crores is hardly anything for a company that makes so much more than that in a single month. RIL is the biggest company of India and it makes an operating profit of 30,000 crores in a year. Where do you think will they keep all that surplus cash? They HAVE to invest all those extra cash somewhere which will give them further profits in future. Just because reliance ventured into other sectors does not mean that Reliance is going down and is a crap company. There is no company in India whose profits come any close to Reliance Industries. And all of these purchases are going to bring in profits for them and it will all reflect in their balance sheets, let some time pass.

Retail Investors

We, the retail investors earn money from our jobs and businesses and invest into the stock market thus buying stakes in different companies of different sectors, so if we can invest our money to make profits why cannot reliance do the same? Everyone wants to profit from their investments and so does Reliance. Why would they keep so much surplus cash sitting at home doing nothing when they can be invested into anything that looks interesting and profitable in a longer term?

Hold Reliance Industries Or Sell?

My sincere suggestion to all the Reliance Industries share holders is to continue to hold this stock. Reliance Industries is one such company that will never give you loss, provided you hold RIL for a longer period of time. Give them some time to carry on their investments and reflect the investment profits into their balance sheets. Such a huge company can never go down, not even in anyone’s dreams. I have big time faith on this company and so I’m very positive on Reliance but from a long term view.

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