Brokerages expect digital services to remain the key growth driver for Reliance Industries (RIL) in the coming quarters.
“Digital Services is likely to remain the biggest growth driver, contributing ~85% to RIL’s incremental consolidated Ebitda over FY26-28,” Motilal Oswal said in a report.
The brokerage expects the digital business to deliver an Ebitda (earnings before interest, taxes, depreciation and amortisation) CAGR of about 19% over FY26-29, driven by tariff hikes (around 15% from Q3FY27), market share gains in wireless, and continued ramp-up of home broadband and enterprise offerings.
5G Monetisation Engine
Jio Platforms delivered another strong quarter, adding 8.9 million subscribers to take its base to 533 million, up 7.1% year-on-year, while average revenue per user (ARPU) improved 3.3% to Rs 215.6. The number of 5G subscribers rose to 285 million, driving Ebitda up 15.1% year-on-year and 4% sequentially to Rs 20,900 crore, while margins expanded to a record 53.3%, Systematix Institutional Equities said.
The combination of higher data usage, better monetisation and operating leverage keeps “telecom” among RIL’s strongest earnings engines, the brokerage said.
Systematix said Jio’s proposed IPO and the progress towards its listing would be a “key near-term catalyst”. It has largely retained its estimates, projecting EBITDA growth of 9.4% and 6.1% in FY27E and FY28E, respectively, with an EBITDA margin of around 17%.
“We maintain our positive long-term view on RIL, supported by its diversified business model, multiple value-unlocking catalysts and strong execution across its consumer and energy businesses,” it said.
The company is also advancing its integrated New Energy ecosystem, with FY27 expected to focus on execution and FY28-29 likely to witness a meaningful scale-up, Systematix said.
At the consolidated level, the brokerage has factored in an Ebitda/PAT CAGR of 7.7% and 6%, respectively, over FY26-28, largely underpinned by sustained momentum in digital services. It also expects the retail business to revive going forward.
Retail Hyperlocal Pressures
Motilal Oswal expects Reliance Retail to deliver a net revenue CAGR of about 11% over FY26-29, driven by store expansion, improved productivity and the scale-up of JioMart. However, the faster ramp-up of lower-margin hyperlocal businesses could weigh on blended EBITDA margins, resulting in an Ebitda CAGR of around 9% over the same period.
Overall, Motilal Oswal has built in a consolidated Ebitda/PAT CAGR of around 9-10% over FY26-28. “We do not build in any meaningful earnings contribution from RIL’s forays in new energy, data centre, AI, and FMCG businesses in the near term.”
Its FY27-28 Ebitda estimates remain largely unchanged as stronger oil-to-chemicals (O2C) earnings are offset by losses in the retail fuel joint venture. However, its FY27 PAT estimate has been raised by around 7%, primarily due to higher other income and lower minority interest, the brokerage said.
RIL on Friday reported a 22.4% year-on-year decline in consolidated net profit attributable to owners for the June quarter at Rs 20,946 crore, as the corresponding quarter last year included a one-time gain from the sale of its stake in Asian Paints.
Excluding the impact of the high base, the company delivered an operating performance ahead of market expectations, with revenue, operating profit and net profit all surpassing Bloomberg estimates, aided by strong refining margins despite supply disruptions caused by the West Asia conflict.
The oil-to-chemicals (O2C) business emerged as the biggest contributor to the quarter’s performance. Segment revenue rose 30.4% year-on-year to `2,01,803 crore, while Ebitda increased 17.2% to `17,010 crore as record transportation fuel cracks and improved downstream petrochemical margins more than offset lower production due to a planned refinery turnaround.