Reliance Industries Ltd’s (RIL) shares are now below the levels seen on 9 August last year, before its last annual general meeting (AGM), when the firm laid out a net debt reduction plan.

With valuations turning attractive again, the moot question is whether investors should bet on the company.

Note that these events come at a time when the outlook for RIL’s telecom business has improved after the tariff hikes taken in December. The full benefit of the tariff hikes should flow this quarter onwards.

Also note that the industry regulator is now considering a floor price for telecom services, which can boost revenues and profits further. As such, the share of the telecom business in total Ebitda (earnings before interest, tax, depreciation and amortization) is expected to increase over the next two years.

This will also help compensate the underperformance of the energy segment. Moreover, the slump in oil prices this week brought about concerns of delays in the proposed 20% stake sale of RIL’s refining and petrochemicals to Saudi Aramco.

Some analysts, however, believe that not all is lost as far as the deal with the state-run Saudi firm goes.

“We do not rule out delays and possibility of staggered payout like Aramco’s recent acquisition of SABIC," said a Kotak Institutional Equities report on 11 March. “In our view, the strategic access to downstream capacity has become more crucial for Saudi Aramco post the recent developments in oil markets, wherein it has increased discounts on its crude to gain market share after Opec+ discord on required production cuts." Opec+ stands for the Organization of the Petroleum Exporting Countries and its allies.

Analysts reckon that the recent supply-led drop in oil prices augur well for refining margins, as crude discounts rise. However, some of the anticipated gains from better margins may be offset by softer demand conditions.

On the other hand, petrochemical margins are a key monitorable, as industry overcapacity and subdued demand may weigh on prospects. Already, the petrochemicals segment’s Ebit fell as much as 28.5% year-on-year in the December quarter. “There could be a further adverse impact on petrochemicals products’ demand due to Covid-19 and slowdown of demand from China," said an analyst requesting anonymity.

Covid-19 related fears may cast a shadow on retailers in general, as consumers choose to stay indoors to protect themselves from the virus. This means RIL’s retail business is exposed to some risks as well.

So, while valuations have corrected handsomely, expecting sharp upsides may be foolhardy, especially given the current market conditions. At the same time, note that analysts now attribute about 50-60% of RIL’s estimated enterprise value to its consumer businesses; the stock’s future depends on how these businesses perform.