RIL Q2 Results: Nuvama sees 17% EBITDA growth, led by O2C biz. Here’s what to expect

Oil-to-telecom conglomerate Reliance Industries (RIL) is likely to report stronger-than-expected earnings for the July-September quarter, aided by improved refining margins and higher refinery throughput. However, according to Nuvama Research, the bigger story for investors lies in the company’s New Energy business, which could emerge as a meaningful earnings contributor over the next few years.

The domestic brokerage expects RIL’s consolidated EBITDA to rise 17% year-on-year (YoY) to Rs 53,700 crore in Q2FY27, compared with its earlier estimate of 12% growth. Profit after tax (PAT) is projected to increase 15% YoY to Rs 20,900 crore, driven largely by an improvement in refining margins.

Nuvama has retained its Buy rating on RIL, with a target price of Rs 1,766 per share based on a sum-of-the-parts (SOTP) valuation. It also sees scope for a valuation re-rating as the New Energy business scales up and contributes more significantly to earnings.


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Refining gives Reliance a near-term lift

The immediate boost is expected to come from the oil-to-chemicals (O2C) business, where Nuvama estimates EBITDA will jump 38% YoY to Rs 20,700 crore. Higher throughput, stronger gasoil and aviation turbine fuel (ATF) cracks, improved gasoline cracks and inventory gains are expected to support performance.

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New Energy could emerge as a key earnings driver

While RIL’s New Energy business is still at an early stage, Nuvama expects it to scale up rapidly over the next few years.

The brokerage projects New Energy EBITDA to rise from Rs 1,500 crore in FY27 to Rs 20,100 crore by FY30, implying a compound annual growth rate (CAGR) of 137%. Its share of RIL’s total EBITDA could reach around 7% by then.

Nuvama also expects the business to turn profitable, with PAT rising from a loss of Rs 300 crore in FY27 to a profit of Rs 10,600 crore by FY30, contributing around 8% of RIL’s overall PAT.

The business spans solar manufacturing, batteries, electrolysers, green hydrogen and renewable power. RIL has commissioned 6 GW of module and 2 GW of cell manufacturing capacity and is working towards an integrated 10 GW solar manufacturing facility, with plans to eventually scale capacity to 20 GW.

Nuvama estimates that the initial 10 GW module facility, operating at 75% utilisation, could add around Rs 3,400 crore to PAT, assuming the company achieves a premium of at least 5% on domestic content requirement (DCR) modules.

These projections suggest that New Energy could become a meaningful contributor to RIL’s earnings over the next few years, gradually changing its earnings mix. While refining is expected to drive near-term growth, the scaling up of New Energy could provide an additional source of earnings growth over the longer term.

Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here