Jio, retail to drive growth at RIL, say brokerages; O2C to see moderate growth

RIL posted  13 % decline in profits in Q4FY26. RIL’s 16971 crore profit in Q4FY,26  was the lowest for the company in the past six quarters. O2C segment posted a 3.7% decline YoY in Q4FY26 at Rs 14520 crore amidst sharp rise in crude premiums on physical barrels, elevated freight and insurance costs and higher fuel cost, The  company also held fuel prices at outlets , leading to under recoveries in fuel retailing.

Oil and gas segment posted a 18.1% dip in EBITDA at Rs 4195 crore due to lower revenue coupled with higher operating cost due to maintenance activity and government levies.

Motilal Oswal has cut its FY27 EBITDA and PAT estimates

Motilal Oswal has cut its FY27 EBITDA and PAT estimates by 3-4%, due to challenges in the energy business and delays in tariff hikes in RJio.

“We expect RJio to remain the biggest growth driver (digital to contribute ~80% of RIL’s incremental EBITDA), with 18% EBITDA CAGR over FY26-28, driven by the wireless tariff hike (~15% in Q೩), market share gains in wireless, and the continued ramp-up of homes and enterprise offerings,” it said.

The brokerage expects Reliance Retail to deliver ~12% revenue CAGR over FY26-28, driven by a mix of store rollouts, improved productivity and scale-up of hyper-local offerings.

Jio was the best performer among the business segments of RIL and posted a 18% growth in EBITDA at Rs 20,060 crore in Q4FY26 as compared to Rs 17016 crore in Q4Fy25. EBITDA of retail business grew 2.8% at Rs 6690 crore in Q4FY26

Going ahead, it expects only a modest recovery in RIL’s O2C EBITDA over FY26-28. “Our FY28 consolidated EBITDA for O2C and E&P is broadly similar to FY24.Overall, we build in a CAGR of ~9-10% in RIL’s consolidated EBITDA and PAT over FY26-28,” it said.

BOB Capital Markets’ analysts said they remain positive on growth, driven by telecom and retail businesses.” O2C will likely see short-term business volatility. Green energy business will be the major segment post commissioning,” they said.

While the brokerage maintained ‘buy’ rating, to account for moderation in O2C and retail segments, it has revised target price downwards.

RIL said the work on the world’s largest renewable energy generation project at Kutch with 150 GWp is in full swing. It will start installations in the next few quarters as it also ramp up our evacuation capacity to Jamnagar. The company said it targets to progressively achieve 20 GWp annual Solar PV manufacturing fully integrated across the value chain in the next few quarters.

Elara Capital said GRMs (gross refining margins) may be stronger post normalization of Hormuz traffic versus pre -war expectations. The brokerage said whenever Hormuz trade normalises, O2C will benefit from a rise in GRM given impact on refining and petchem infrastructure.

However, it said current macro – volatile crude and strong distillates amid logistics disruption and policy intervention via windfall taxes –does not bodes well in the near term.

It has upgraded the RIL stock to ‘buy ‘from  ‘accumulate as the stock has corrected 8% in the past six months, factoring in slower retail growth, and expectations of strong GRMs  post normalisation of of Hormuz traffic

“Q4 was very volatile. We expect better Q1 numbers as the West Asia War is showing some signs of cooling off,” said analyst at a Mumbai based brokerage who did not want to be quoted.

He said they expect O2C to be comparatively better QoQ as situation is stabilizing in the region. The analyst added that both retail and JIo should continue to do well.

RIL also said in the Q4 earnings presentation that ia is well placed in current environment with strong earnings visibility and high cash levels. It said there are strong fuel cracks driven by supply tightness and downstream margins remain pressured. RIL cautioned that resolution of geopolitical conflict, resumption of supply channels are critical to normalize markets.