Reliance Q1 earnings to rise on O2C, Jio despite retail lag

Reliance Industries will report its April-June quarter earnings after market hours on Friday, with analysts forecasting double-digit growth in revenue and operating profit despite a mixed performance across its core divisions. Consensus estimates peg consolidated revenue between ₹3.09 trillion and ₹3.20 trillion, while net profit is projected between ₹16,200 crore and ₹18,470 crore, representing growth of up to 10% year-on-year.

Brokerage forecasts, however, diverge significantly on the bottom line. Equirus Securities expects net sales to surge 35% year-on-year to ₹3.28 trillion, driving a 13% jump in net profit to ₹24,593 crore. Systematix Institutional Equities offers a more conservative view, projecting a 27% revenue increase to ₹3.09 trillion but anticipating a 3% decline in profit after tax to ₹19,700 crore. Both firms agree that consolidated EBITDA margins will contract year-on-year, settling near the 15% mark.

The oil-to-chemicals (O2C) division is poised to be the primary catalyst for the quarter. Systematix forecasts O2C revenue rising 35% year-on-year and 13% sequentially, supported by stronger diesel cracks in a volatile global environment. Antique Stock Broking expects O2C EBITDA to climb 25% quarter-on-quarter as gross refining margins and petrochemical spreads recover from a weak prior period.

The digital services business, anchored by Jio, is expected to provide steady support for the conglomerate's overall earnings. Nuvama Institutional Equities projects digital EBITDA will grow 11% year-on-year and 2% sequentially. This growth is fueled by a projected 3% year-on-year rise in average revenue per user and a 7% expansion in the subscriber base. For investors, Jio's operating metrics remain a prelude to the main event: clarity on future telecom tariff hikes.

Retail and upstream operations are expected to act as a drag on the consolidated figures. Systematix models a 12.4% year-on-year increase in retail EBITDA, but notes that muted consumption trends will keep revenue per square foot flat sequentially. Antique Stock Broking is more cautious, estimating just a 7% year-on-year rise in retail EBITDA to ₹6,803 crore. Meanwhile, the upstream oil and gas segment faces deeper structural pressure, with Antique flagging lower production from the KG-D6 gas fields as the weakest segment across the portfolio.

Beyond the headline earnings, management commentary will likely dictate the stock's near-term trajectory. Market participants will closely scrutinize updates on the sustainability of O2C margins, any shifts in retail demand trends, and the company's future capital expenditure plans.