Reliance Q1 earnings to rise on refining, telecom strength
Reliance Industries is expected to post up to 10% EBITDA growth in the first quarter, but investors will focus on whether refining strength can offset persistent weakness in retail and upstream production.
Reliance Industries is forecast to report a 4% to 10% year-on-year increase in consolidated EBITDA for the first quarter, with Kotak Equities pegging the rise at 8.4%. The conglomerate is being pulled in different directions, relying on a sharp recovery in its oil-to-chemicals division and steady telecom growth to mask underlying softness. The divergent performance across its core businesses will test whether the stock's premium valuation is justified.
The oil-to-chemicals segment is expected to be the primary growth engine. Jefferies projects a 20% jump in O2C EBITDA, citing expanded petrochemical spreads and higher gross refining margins at the company's SEZ refinery. Kotak forecasts a more modest 12.1% year-on-year increase for the division, noting benefits from US ethane-based petrochemicals, a weaker rupee, and the absence of a windfall tax. However, YES Securities anticipates total refining throughput will fall 7.2% year-on-year to 16.8 million metric tonnes, with gross refining margins settling at $10 per barrel.
Jio Platforms will likely provide the steadier underpinning for the quarter. Nuvama expects digital EBITDA to climb 11% year-on-year, driven by a 7% rise in subscribers and a 3% increase in average revenue per user. The telecom arm has capitalized on recent tariff hikes and increased data consumption. Market participants will be listening closely for management commentary on the pace of 5G monetisation and the trajectory of home broadband expansion.
Conversely, the retail and upstream arms are poised to drag on consolidated figures. Weak consumption trends and margin pressures are expected to constrain retail profitability despite solid revenue growth that could reach Rs 97,700 crore according to YES Securities. After years of aggressive store expansion, investors are prioritizing evidence of operating leverage over top-line gains. The upstream oil and gas division faces a steeper decline, with Jefferies forecasting a 21% plunge in EBITDA due to a 7% drop in production from the KG-D6 block.
For market professionals, the upcoming release will shift focus away from headline growth and toward the sustainability of refining margins and retail profitability. Any guidance on future tariff actions at Jio or production outlooks at KG-D6 will likely dictate the stock's near-term trajectory.
