Reliance Industries Q2 results today: Can the old economy rescue the new Reliance?

When billionaire Mukesh Ambani-led conglomerate Reliance Industries Ltd (RIL) announces its Q2 results post-market hours today, analysts expect the legacy oil-to-chemicals business to deliver the sharpest profit recovery, while the consumer businesses that underpin the group’s future remain uneven.

Brokerages expect consolidated EBITDA to rise roughly 15%–17% year-on-year, led by a strong rebound in O2C earnings. Jio Platforms is likely to maintain steady growth, but Reliance Retail may continue to face margin pressure. The result could therefore revive the energy engine but also reinforce questions about the pace of the group’s transition beyond oil and refining.

JPMorgan expects Reliance’s consolidated EBITDA to rise 16% year-on-year and 12% sequentially, with O2C EBITDA increasing 40% year-on-year and 24% sequentially. Kotak Securities estimates consolidated EBITDA growth of 15%, with O2C EBITDA rising 47% year-on-year and 29% sequentially.


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O2C expected to drive the quarter

The sharp improvement in Reliance’s energy earnings is expected to come from stronger refining cracks, improved petrochemical margins and higher volumes after maintenance at one of its crude distillation units in the previous quarter.

Singapore gross refining margins rose sharply from the year earlier period, helped by stronger diesel, gasoline and aviation fuel spreads. Jefferies noted that Singapore GRM increased to $14.1 a barrel from $4.3 a barrel a year earlier, while petrochemical margins also improved year-on-year.

JPMorgan said O2C could benefit from the recovery in volumes and lower losses in petroleum retail. It also flagged the segment’s performance as the key near-term stock trigger. “Delivered upside to O2C is important for stock performance near term,” JPMorgan said.

That makes the quarter less about whether Reliance can report growth and more about whether the energy business can deliver enough upside to change investor sentiment around the stock.

Jio is growing, but not yet re-rating the group

Jio Platforms is expected to remain a stable contributor rather than the main earnings surprise.

Nomura estimates Jio Platforms’ EBITDA at ₹22,050 crore, up 17% year-on-year and 4% sequentially. It expects average revenue per user to rise to ₹219 a month from ₹215.6 in the previous quarter. Nuvama expects digital EBITDA to rise 16% year-on-year, supported by higher ARPU and subscriber additions.

Ambit has a more bullish view on Jio’s monetisation trajectory. It expects ARPU to grow 3.4%, helped by premium membership adoption among about 100 million subscribers. The brokerage expects this to support 15% EBITDA growth and 12% profit growth.

That would strengthen the case that Jio is shifting from a subscriber acquisition story to a monetisation story. But the numbers are still more of a steady compounding engine than a dramatic quarterly catalyst for Reliance.

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Retail remains the valuation test

Reliance Retail is likely to be the weaker link in the quarter. Kotak expects retail revenue to grow 11.7% year-on-year, but estimates EBITDA margins at 6.5%, down 86 basis points from a year earlier. It expects retail EBITDA to decline marginally year-on-year, even as it improves sequentially.

Nomura also expects retail revenue to grow 8% year-on-year, while EBITDA remains broadly flat. Nuvama expects retail EBITDA to decline 1% year-on-year, citing a high base and the impact of the RCPL demerger.

This is where the “new Reliance” faces its biggest test. Revenue growth alone may not be enough if retail margins remain under pressure. JPMorgan said a recovery in retail growth is important for Reliance’s valuation, even as O2C upside remains the immediate stock trigger.

The question beyond the numbers

The results may also be judged by what Reliance says about its next growth cycle. JPMorgan identified updates on the commissioning of the group’s new energy projects as a possible positive catalyst at the analyst meeting.

That could shift investor attention from the strength of the current quarter to the monetisation potential of Reliance’s newer businesses. The market is likely to look for evidence that the company’s energy transition can eventually produce growth comparable to the scale of its telecom and retail ambitions.

For now, however, the earnings mix remains tilted towards the old economy. O2C is expected to provide the biggest lift, Jio should deliver steady growth and retail may continue to constrain operating leverage.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)