Reliance climbs ahead of earnings as refining offsets retail slump
Reliance Industries shares gained ahead of quarterly results expected to show resilient profits driven by refining and telecom, even as a broader retail slowdown weighs on India's largest conglomerate.
Reliance Industries rose as much as 2.4% to ₹1,323.80 on the Bombay Stock Exchange on Friday, July 17, ahead of its April-June earnings release. The stock opened at ₹1,301 against Thursday's close of ₹1,293. The pre-result rally provided a brief respite for a stock that has declined 11% over the past year.
The longer-term trajectory reflects investor caution, with shares down 1% over the past month and 9.5% over six months. The stock hit a 52-week low of ₹1,253.65 in June, having fallen sharply from a 52-week high of ₹1,611.20 in January.
Analysts project the oil-to-telecom conglomerate will post healthy growth in operating profit, offering stability amid ongoing geopolitical tensions in West Asia. Equirus Securities expects consolidated net profit to grow 13% year-on-year to ₹24,593 crore, with EBITDA rising 14.5% to ₹49,100 crore. Systematix Institutional Equities holds a more conservative view, forecasting EBITDA to increase 9.9% to ₹47,100 crore.
The anticipated earnings strength rests primarily on the oil-to-chemicals division, where improved refining margins and stronger petrochemical spreads are expected to drive a recovery from a weak March quarter. The digital services arm, Jio, is also forecast to remain a steady profit pillar, anchoring the group's broader financial performance.
However, the results will highlight a growing divergence within the conglomerate's portfolio. Reliance Retail is projected to be the weakest segment, constrained by subdued consumer demand and slower discretionary spending despite ongoing store expansion.
The contrast between Jio and Reliance Retail underscores a broader macroeconomic challenge in India. While digital infrastructure consumption remains resilient, the physical retail segment is grappling with a visible pullback in consumer spending. Analysts caution that margin pressures in the retail business could persist if discretionary demand remains weak.
The upstream segment adds another layer of complexity, with output declines at the KG-D6 block expected to weigh on the bottom line. Equirus projects that despite the overall profit growth, EBITDA margins will shrink by 267 basis points year-on-year to 15%, though they should remain flat sequentially.
For investors, the quarterly report will serve as a critical barometer for Indian consumer health. It will test whether the strength in Reliance's energy and telecom businesses can sustain valuations while its retail arm navigates a prolonged demand slump.
