Reliance Industries (RIL) is expected to improve its profitability and see a strong sequential rebound in Q1FY27 after a weak performance on the profit front in Q4FY26.
Brokerages expect strong growth in the oil-to-chemicals (O2C) segment led by expansion in petchem spreads and benefit from SEZ refinery and Jio vertical. The company is also expected to post higher gross refining margins in Q1.
International brokerage Jefferies expects a profit after tax (PAT) (attributable to owners) of Rs 19,846.8 crore in Q1 with a growth of 17% q-o-q and a decline of 26% y-o-y. RIL’s consolidated Ebitda (earnings before interest, tax, depreciation and ammortisation) is expected to rise 10% y-o-y, with a 20% jump in the oil to chemicals segment and a 12% y-o-y jump in its consumer business. The upstream Ebitda should decline 21% y-o-y, the brokerage said.
The company posted a flat growth in consolidated Ebitda in Q4FY26.
Refining Strengths
“O2C Ebitda growth should be led by sharp expansion in petchem spreads and benefits to the SEZ refinery from higher GRM,” Jefferies said. Retail revenue growth is expected to be 11% y-o-y with Ebitda growth of 8% y-o-y, it said.
In comparison, oil marketing companies (OMCs) are expected to post Ebitda losses with negative marketing margins led by higher crude prices owing to the conflict in West Asia. Refining margins remain firm, it said. OMCs raised retail prices in second half of the June quarter to lower their marketing losses.
JP Morgan expects a 13% q-o-q growth in PAT (attributable to owners) and a 6% y-o-y to Rs 19,136 crore during the quarter under review. The brokerage said that refining cracks and petrochemical margins were very strong in Q1. Reliance observed a maintenance shutdown for one of its four CDUs during the quarter, but the volume loss there should be offset by the weaker currency. “Retail earnings might continue to be dampened by lower margins on year — but overall we think Reliance should report strong sequential earnings growth,” it added.
JP Morgan said Reliance should benefit from strong refining/petchem segement. “If it delivers upside on commodity margins in June, then confidence in the ‘transmission’ of still higher margins for the rest of the year will improve — driving upgrades,” it said.
Citi said the company’s O2C segment is expected to improve sequentially on higher gross refining margins (GRMs) and strong petchem spreads. Retail Ebitda growth is likely to remain soft owing to quick commerce investments, it said.
Retail and Jio
According to Kotak Institutional Equities, RIL’s net profit is expected to grow 12% q-o-q and 5.2% y-o-y to Rs 19,004 crore. It expected the firm’s consolidated Ebitda to be at Rs 46,500 crore, up 8.4% y-o-y. It estimates O2C Ebitda to rise nearly 12% y-o-y/q-o-q, driven by likely stronger earnings for the SEZ refinery (no impact of the windfall export tax), US ethane-based petchem and a weaker rupee.
“We expect oil & gas segment Ebitda to decline 11.3% y-o-y (up 5.7% q-o-q on a low base). For Retail Retail, we assume revenue growth of nearly 12% y-o-y (10.8% y-o-y in Q4) and Ebitda margins to be flat at 6.8% q-o-q (down 38 bps y-o-y). We expect retail business Ebitda to rise around 5.6% y-o-y (down 1.3% q-o-q),” it said.
However, Nuvama Institutional Equities expects RIL’s Ebitda growth lower at 4% y-o-y and said higher growth in Jio would offset lower Ebitda growth in O2C, retail and dip in O2G.
“O2C Ebitda is likely to grow 2% YoY/QoQ despite strong Singapore GRM on increased fuel retailing losses, in addition to inefficiencies caused by government regulations such as windfall tax, maximising LPG production, KG-D6 gas reallocation,” it said.
It said digital Ebitda could go up 11% y-o-y/2% q-o-q on higher Arpu (3% y-o-y/1% q-o-q) and subs-adds (7% y-o-y/2% q-o-q). Retail Ebitda could go up 3% y-o-y and O&G Ebitda is likely to dip 14% y-o-y due to 7% fall in production and increased operating expenditure, it said.
