RIL Q1 preview: Will strong O2C performance drive overall earnings growth?

Reliance Industries is scheduled to report its June-quarter (Q1FY27) results on July 16. The company is expected to post a steady performance, led by a recovery in its oil-to-chemicals business and continued growth in digital services, even as retail growth stays muted and oil and gas earnings decline.

Brokerages expect consolidated EBITDA to grow in the range of 4–10% year-on-year in Q1. The key driver is likely the O2C business, supported by stronger refining margins, tighter petrochemical spreads, a weaker rupee, and benefits from the SEZ refinery. Jio is also expected to support earnings through a higher average revenue per user and subscriber additions.

Retail, however, may remain a soft spot due to weak consumption trends and margin pressure. The upstream oil and gas business is expected to decline from last year due to lower production from the KG-D6 block.

O2C business may drive the quarter

Kotak Equities expects RIL’s consolidated EBITDA to rise 8.4% year-on-year and 5.4% sequentially. It sees O2C EBITDA rising 12.1% year-on-year and 12% quarter-on-quarter. The brokerage said the segment should benefit from strong SEZ refinery earnings, no windfall tax impact, US ethane-based petrochemicals and a weak rupee.


Jefferies is more optimistic on O2C. It expects consolidated EBITDA to rise 10% year-on-year, with O2C EBITDA growing 20%. It said the segment should gain from sharp expansion in petrochemical spreads and higher gross refining margin benefits for the SEZ refinery.

YES Securities expects refining throughput to fall 7.2% year-on-year and 2.3% quarter-on-quarter to 16.8 million metric tonnes. It expects gross refining margin at $10 per barrel.

JP Morgan said refining cracks and petrochemical margins were very strong in the first quarter. It noted that Reliance had taken a maintenance shutdown for one of its four crude distillation units during the quarter, but the volume loss may be offset by weaker currency.

Motilal Oswal expects standalone EBITDA at Rs 14,800 crore, up 12% year-on-year. It expects production meant for sale at 17.7 million metric tonnes, up 2% from a year earlier.

Jio may support consolidated earnings

Digital services are expected to remain one of the steadier parts of Reliance’s business. Nuvama expects digital EBITDA to rise 11% year-on-year and 2% quarter-on-quarter, led by higher ARPU and subscriber growth. It expects ARPU to rise 3% year-on-year and 1% sequentially, while subscribers are expected to grow 7% year-on-year and 2% quarter-on-quarter.

YES Securities expects telecom ARPU at Rs 215.4, with subscribers at 531.6 million.

The telecom business has benefited from tariff hikes, subscriber additions and higher data usage. Investors will watch whether ARPU growth continues and whether the company gives any indication on future tariff action, 5G monetisation and home broadband growth.

Retail growth seen muted

Reliance Retail may report revenue growth, but profitability is expected to remain under pressure. Kotak expects retail EBITDA to rise 5.6% year-on-year but fall 2.6% quarter-on-quarter. It expects retail revenue growth of about 12% year-on-year.

Nuvama expects retail EBITDA to grow 3% year-on-year, citing margin pressure and weak consumption macros. Jefferies expects retail revenue to rise 11% year-on-year, with EBITDA up 8%.

YES Securities expects retail revenue to grow 16% year-on-year to Rs 97,700 crore, though it sees a slight sequential decline of 0.8%.

The retail business will be closely watched for store additions, footfalls, grocery performance, fashion and lifestyle growth, and margin trends. After years of rapid expansion, investors are looking for signs of operating leverage and steady profitability.

Oil and gas likely to drag

The oil and gas business is expected to be the weakest segment for the quarter. Kotak expects oil and gas EBITDA to fall 11.3% year-on-year, though it may rise 5.7% sequentially. Nuvama expects O&G EBITDA to decline 14% year-on-year due to a 7% fall in production from the KG-D6 block and lower margins.

Jefferies expects upstream EBITDA to fall 21% year-on-year.

The decline in this segment may partly offset the gains from O2C and digital services. Investors will look for management commentary on production trends, gas pricing and the outlook for the KG-D6 block.

What investors will watch

For the quarter, the market will focus on four areas: O2C margin recovery, Jio ARPU growth, retail margin pressure and upstream production decline.