* Shares underperform main index so far this year
* Bulls argue telecoms, power, shale ventures to help firm
* Bears say failure to raise gas output will hurt
* Reliance shares down 6.6 pct yr to date (For more Reuters BUY or SELL stories click [BUYSELL/])
MUMBAI, Aug 5 (Reuters) - Reliance Industries' (RELI.BO) shares have been a market underperformer as analysts cut earnings estimates after India's largest petrochemicals and oil refining company warned it will delay boosting gas production.
The firm, with a 12.8 percent weighting - the biggest - in the local benchmark stock index .BSESN, is making a big push into power, telecoms, shale gas and financials as it seeks new growth levers. It has interests in energy exploration and retail.
Controlled by billionaire Mukesh Ambani, who splashed out $1 billion on a 27-storey home, Reliance has outperformed state-run Oil & Natural Gas Corp (ONGC.BO) and German chemical rival BASF BASDFn.DE on earnings growth over the past five years.
Can Reliance shares, often seen as a bellwether for Asia's third-largest economy, get back to its winning run?
StarMine comparitive data: r.reuters.com/cum43n
"A couple of quarters may be subdued but there is a lot of pessimism being built around the stock," said Deepak Pareek, an analyst at Angel Broking. "Refining margins seem to be improving, while the petrochemicals business is also looking good."
Chairman Ambani, 53, has stepped up acquisitions after ending a five-year feud with younger brother Anil in May. On Thursday, Reliance teamed up with U.S.-based Carrizo Oil & Gas Inc (CRZO.O) to buy a shale stake, its third stake in the sector. [ID:nSGE67403X]
In June, Reliance made a dramatic return to the fast-growing but highly competitive telecoms sector, agreeing to buy a low profile firm which won a nationwide licence in India's broadband auction. [ID:nSGE65A071]
Reliance plans to invest about $5 billion in the venture over the next two years.
"The company was generating so much cash that it needed to invest it somewhere. Power seems like a natural fit for Reliance, while telecoms also offers great opportunities," said Pareek, who has a buy rating on the stock.
The refining business is the biggest contributor to the company's revenue.
DIFFICULTY TO RAISE GAS OUTPUT
"The biggest trigger for Reliance is its exploration and production business and any negative news flow there does not gel well," said Arun Kejriwal, director of research firm KRIS.
Peak output of 80 million cubic metres a day (mmscmd) at Reliance's block in the Bay of Bengal is expected to double the gas capacity of energy-hungry India, Asia's second-fastest growing major economy.
The company is currently pumping about 60 mmscmd from the D6 block in the vast Krishna Godavari basin, where it made India's biggest gas find in 2002.
Kejriwal, whose firm advises wealthy individuals, is recommending his clients to avoid investing in Reliance, until the stock dips substantially.
Without a hike in gas production, some analysts don't see a reason to buy the stock now.
"There is no immediate trigger for the stock. It will be a while until benefits accrue from its recent forays," said Chirayush Bakshi, vice-president of advisory at brokerage Motilal Oswal. He has a hold rating on the stock. (Editing by Jui Chakravorty and Anshuman Daga)