Reliance Industries Q1 Earnings Preview
Reliance Industries is expected to report higher Q1 FY27 earnings led by its O2C business, while Jio maintains steady growth and retail margins remain under pressure.
Reliance Industries is expected to post stronger Q1 FY27 earnings, driven by higher O2C profitability and steady Jio growth. However, retail margins and oil & gas earnings may remain under pressure, making management commentary on new energy, capex and Jio IPO plans a key focus for investors.
Reliance Industries Ltd. (RIL) is expected to kick off the new fiscal year on a positive note, driven by expected higher sequential O2C earnings for the June quarter. Retail and oil & gas segments are expected to remain under pressure.
According to the Bloomberg consensus, consolidated revenue for Reliance is expected to grow by 2.4% quarter on quarter to ₹3,01,024 crore, compared to ₹2,94,059 crore in the March quarter. Consolidated EBITDA is expected to grow by 5% to ₹46,367 crore from ₹44,141 crore, and the EBITDA margin is estimated to improve to 15.4% from 15%. The net profit for the quarter is expected to be ₹20,451 crore, a 20% quarter-on-quarter growth, compared to ₹16,971 crore in the March quarter.
O2C Business to Lead the Recovery
RIL’s O2C unit is expected to be the key growth driver, and analysts expect the O2C segment EBITDA to grow by 11% quarter on quarter to ₹16,146 crore, compared to ₹14,520 crore in the March quarter.
Greater petrochemical spreads and an improvement in Gross Refining Margins (GRM) at Reliance’s SEZ refinery are expected to aid this improvement. Additionally, the company completed scheduled maintenance on one of its four Crude Distillation Units (CDUs) during the quarter. Analysts expect the impact of lost production to be offset by improved refining margins and a weaker rupee.
Retail and Oil & Gas Businesses May Stay Under Pressure
Reliance Retail is expected to see a decline in performance. Segment EBITDA is forecasted to be at ₹6,784 crore, which is a decline of 2% from ₹6,921 crore in the last quarter. Even though consumer demand remains strong, margins have also been declining.
The oil and gas exploration business is expected to see a slight decline as well. EBITDA is expected to decline 1%, to ₹4,148 crore from ₹4,195 crore due to a decline in gas production.
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Jio Expected to Maintain Steady Momentum
Reliance Jio is expected to see continued growth. It is forecasted that ARPU will increase to ₹216 from ₹214 for the March quarter. Reliance Jio will also see an increase in subscribers to 53.3 crore from 52.4 crore, as a result of continued subscribers and upgrading to higher plans.
Investors will also be focused on the long-term comments from the company. Refining and petrochemical margins, sourcing crude in a changing geopolitical environment, recovery in Reliance Retail, growth in JioFiber, and the new energy business will be of interest, as well as their spending plans and debt for the year. There are also expected to be comments on Reliance Jio’s tariff plans ahead of their IPO.
Although O2C and telecom are expected to be the main growth areas for Reliance, comments on consumer areas and new energy business will be important for investors, according to market analysts.