Reliance Industries Q1 FY26:
Reliance Industries Ltd. (RIL) delivered headline‐grabbing quarterly results on July 18, 2025, as consolidated net profit surged 78% year-on-year to ₹26,994 crore, comfortably topping Street estimates of ₹22,069 crore.
However, underlying operational performance painted a more nuanced picture, with revenue growth slowing and core segments missing analyst expectations.
Below, we dissect the key metrics, segmental performance, analyst reactions, and near-term outlook to help investors decide whether to buy, hold, or sell.
1. Financial Highlights
| Metric | Q1 FY26 | Q1 FY25 | YoY Change | Estimate | Beat/Miss |
|---|---|---|---|---|---|
| Net Profit (Consolidated) | ₹26,994 cr | ₹15,138 cr | +78% | ₹22,069 cr | +22%1 |
| Revenue from Operations | ₹2,48,660 cr | ₹2,36,217 cr | +5.3% | ₹2,41,000 cr | +3% |
| EBITDA | ₹58,024 cr | ₹42,748 cr | +36% | ₹54,000 cr | +7% |
| EBITDA Margin | 23.3% | 18.1% | +520 bps | 22.4% | +90 bps |
| Other Income | ₹15,119 cr | ₹3,983 cr | +280% | ₹4,500 cr | +236% |
- One-Time Gains: A significant ₹8,924 crore gain from the sale of Asian Paints stake boosted other income.
- Core Profit: Excluding non-operational items, core PAT growth moderates, reflecting headwinds in Retail and O2C (Oil-to-Chemicals).
2. Segmental Performance
2.1 Oil-to-Chemicals (O2C)
- Revenue Impact: Refining throughput moderated due to planned maintenance shutdowns.
- EBITDA: ₹29,500 crore (estimated ₹30,500 crore), reflecting a 5% miss on brokerage estimates.
- Margin Pressure: Lower volumes offset by stronger product cracks; sequential O2C EBITDA down ~2%.
2.2 Reliance Jio
- EBITDA: ₹12,200 crore, up 6% QoQ; margin steady ~50%.
- Subscriber & ARPU: Robust addition of 5 million subscribers; ARPU rose 2% to ₹190.
- Capital Spend: Elevated 5G roll-out capex (~₹10,000 crore), consistent with network expansion strategy.
2.3 Retail
- Revenue: ₹84,171 crore, up 11.3% YoY, but below estimates of ~12.5% growth.
- Footfall & Space Addition: Electronics sales slowed due to early monsoon; new store openings trailed guidance.
- EBITDA Margin: Expanded 60 bps to 10.8%; beat consensus thanks to cost controls.
3. Revenue & Profit Growth: Industry Context
An early look at Q1 FY26 results across India Inc. suggests a broad-based revenue slowdown—the weakest top-line growth in 16 quarters, as companies lean on non-core income to sustain profits.
Against this backdrop, Reliance’s 5.3% revenue rise aligns with peers, but its heavy reliance on one-off gains underscores the need to monitor core earnings closely.
4. Analyst Perspectives: Buy, Hold, or Sell?
| Brokerage | Call | Target Price | Viewpoint |
|---|---|---|---|
| Macquarie | Outperform | ₹1,500 | Positive on Jio; flagged slowing Retail and moderated O2C growth. |
| Morgan Stanley | Overweight | ₹1,617 | Bullish on telecom; cautious on refining; sees double-digit EPS growth. |
| Motilal Oswal | Buy | ₹1,700 | Trimmed FY26–27 EBITDA estimates by 1–2%; upbeat on Jio’s ARPU ramp-up. |
| Jefferies | Buy | ₹1,726 | EBITDA 3% miss; sees strong long-term refining outlook; maintains rating. |
| Nuvama | Buy | ₹1,767 | Emphasis on New Energy; expects project ramp-up by FY27. |
| Avendus Spark | Sell | ₹1,350 | Cites margin tailwinds fading; wary of cyclical O2C pressures. |
- Consensus: 18 of 19 analysts maintain Buy/Outperform, average target ~₹1,613 (+9% upside).
- Sell Calls: Minority view focuses on overpaying for cyclical segments and stretched valuations after gains.
5. Near-Term Outlook & Catalysts
- Monsoon Trajectory: Retail footfalls and rural consumption may benefit if rainfall normalizes.
- Refining Margins: Global refinery closures hint at firmer cracks—key for O2C recovery.
- Jio ARPU Hikes: Planned tariff revisions in Q3 FY26 could boost telecom margins.
- New Energy Roll-out: 10 GW polysilicon-to-module facility by FY26-end may underpin long-term growth.
- Capex Cycle: Continued heavy capex in Jio/NE segments could pressure free cash flow.
6. Price Action & Valuation
- Stock Reaction: RIL shares fell ~2.5% on the day of results, as markets digested the miss in core segments.
- Valuation Multiples: Currently trades at ~25x FY27 P/E, vs. five-year average of ~22x.
7. Should You Buy, Hold, or Sell?
Buy if:
- You believe in Jio’s 5G-led monetization and New Energy transition.
- You accept one-off gains as catalysts for strategic redeployment.
Hold if:
- You seek better entry on deeper core earnings clarity.
- You’re wary of elevated capex and margin cyclicality in O2C.
Sell if:
- You view current valuation as pricing in too much growth.
- You prefer less capital-intensive business exposures amid muted economic growth.
Reliance Industries’ Q1 FY26 performance underscores its strategic depth—one-time gains highlight financial firepower, while core operations show caution.
