Reliance Industries' March-quarter earnings missed Street estimates, with the drag coming largely from its energy businesses and softer retail margins. Macquarie called it a “soft print,” pointing to weakness in oil-to-chemicals and upstream operations. It also flagged a more structural concern — upstream gas EBITDA appears to be in decline, and the brokerage sees incremental downside risk if energy weakness lingers, especially after recent cuts to consensus earnings forecasts.
Reliance Industries Q4 Results Key Highlights (Consolidated, QoQ)
- Revenue up 11% to Rs 2,94,059 crore versus Rs 2,64,905 crore (Bloomberg Estimate: Rs 2,82,748 crore)
- Ebitda down 4% to Rs 44,141 crore versus Rs 46,018 crore (Estimate: Rs 47,343 crore)
- Margin contracts 240 basis points to 15.0% versus 17.4% (Estimate: 16.7%)
- Profit down 9% to Rs 16,971 crore versus Rs 18,645 crore (Estimate: Rs 16,944 crore)
Still, the quarter wasn't without offsets. Jio continued to clock healthy subscriber additions, helping cushion the miss. Macquarie believes this, along with likely positive sentiment around a potential Jio listing, could keep the stock supported. It has maintained an Outperform rating on Reliance Industries, with a target price of Rs 1,570.
Morgan Stanley struck a similar balanced tone. The brokerage has retained its Overweight rating on the stock, with a target price of Rs 1,803. While overall performance was largely in line, it highlighted retail as a clear bright spot. Growth was led by quick commerce, fashion, and grocery, while the FMCG segment stood out with revenues more than doubling.
On the flip side, Morgan Stanley flagged underperformance in oil-to-chemicals margins versus peers, along with higher costs weighing on upstream profitability. For a meaningful rerating, the brokerage believes two levers matter: tighter energy and chemical markets, and sustained traction in retail's top-line growth. It does, however, see early signs of improvement emerging across chemicals, fuels, and consumer businesses.
Macquarie on Reliance Industries
- Macquarie maintains an Outperform rating with a target price of Rs 1,570.
- Q4 was a soft print.
- The miss was driven by weakness in the Energy divisions and lower margins in Retail.
- Jio subscriber growth remained supportive.
- Upstream gas EBITDA is seen in structural decline, with KGD6 production past its peak.
- The brokerage flags additional downside risks from continued weakness in the Energy segment.
- However, it remains constructive, expecting positive sentiment to build ahead of the Jio listing.
Morgan Stanley on Reliance Industries
- Morgan Stanley maintains an Overweight rating with a target price of Rs 1,803.
- Retail growth surprised positively, led by quick commerce, fashion and grocery.
- FMCG revenue grew 2.2x.
- On the downside, oil-to-chemical margins underperformed peers, while the upstream oil and gas division missed EBITDA estimates due to higher costs.
- The brokerage believes a recovery in energy and chemicals, along with sustained retail growth, will be key to reversing recent underperformance.
- It sees early signs of improvement emerging across chemicals, fuels and consumer retail.
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