SMAR Daily Industry News

Reliance Industries Reports Record Q2 Profit Amid O2C Growth

Reliance Industries Ltd (RIL) reported record quarterly profits for the July-September period, with consolidated profit after tax reaching ₹29,550 crore for the second quarter of FY27. This figure represents a 33.8% increase compared to the ₹22,092 crore reported in the same period last year. The company’s consolidated revenue grew 27.8% year-on-year to ₹3,62,268 crore, while EBITDA rose 23.9% to a record ₹62,409 crore.

The primary driver of this growth was the oil-to-chemicals (O2C) segment, which saw EBITDA jump 67.9% year-on-year to ₹25,203 crore. This performance was supported by stronger global transportation fuel cracks and improved petrochemical margins. Reliance noted that global supply disruptions, including tensions in West Asia and attacks on refining infrastructure, pushed fuel cracks to 3.0–3.7 times their year-ago levels. Despite higher crude premiums and freight costs, the company utilized a diversified crude sourcing strategy to maintain margins.

While the O2C segment thrived, other areas of the business showed mixed results. The digital services segment, Jio, reported an average revenue per user (ARPU) increase to ₹219 from ₹216, alongside 9 million net subscriber additions. Conversely, the retail business faced challenges, with EBITDA declining 13% year-on-year to ₹5,780 crore. Analysts attributed this to investments in digital commerce, input-cost inflation, and shifts in the festive calendar.

Looking ahead, Reliance expects its new energy projects to begin contributing to earnings from FY28. Nuvama Institutional Equities noted that the company has commenced operations for 6GW of solar module and 5GW of cell manufacturing capacity, with plans to scale combined capacity to 20GW by next year. Additionally, the company is developing battery energy storage systems and transmission infrastructure, which Nuvama suggests could reduce captive power costs by over 25%.

Brokerage reactions to the results have been varied. Nuvama maintained a 'Buy' rating but lowered its target price to ₹1,703, citing a 25% holding-company discount for the potential Jio listing. Equirus Securities, which holds a 'Long' rating on the stock, noted that the results were 11% above consensus expectations, though the firm stated its recommendation is currently under review. RIL shares closed at ₹1,163.55 on the BSE on Friday, October 30, following a period of decline that has seen the stock fall 26.12% so far in 2026.

For investors, the contrast between the robust O2C segment and the struggling retail division remains a focal point. While the long-term potential of the new energy transition offers a growth narrative for FY28 and beyond, the immediate market sentiment is currently weighed down by broader stock pressure and valuation concerns in the retail sector.

Why it matters

Reliance Industries' performance serves as a bellwether for the Indian market, and the divergence between its strong energy earnings and weak retail results highlights the complex challenges facing large-cap conglomerates.

FAQ

What drove Reliance Industries' profit growth in Q2 FY27?
The growth was primarily driven by a sharp recovery in the oil-to-chemicals (O2C) business, which benefited from stronger global transportation fuel cracks and improved petrochemical margins.

How did the retail segment perform during the quarter?
The retail business remained weak, with revenue growth of 6% year-on-year and a 13% year-on-year decline in EBITDA to ₹5,780 crore.

When does Reliance expect its new energy projects to contribute to earnings?
Reliance expects its new energy projects to begin contributing to earnings starting from FY28.

Source: Mint Markets. See the original source for full details.