- Reliance Industries reported a 23% YoY rise in consolidated EBITDA to Rs 56,616 crore in Q2 FY27
- Oil-to-chemicals segment EBITDA surged 68% YoY to a record Rs 25,203 crore
- Brokerages maintain Buy ratings but vary in target prices reflecting retail recovery concerns
Reliance Industries Ltd. (RIL) delivered a strong September quarter of financial year 2027 (Q2 FY27) performance, powered by record profitability in its oil-to-chemicals (O2C) business. Consolidated EBITDA rose 23% year-on-year (YoY) to Rs 56,616 crore, while net profit increased 41% to Rs 25,548 crore. O2C EBITDA surged 68% YoY to Rs 25,203 crore, marking a record for the segment.
But the earnings strength came with a notable gap in performance across businesses. Reliance Retail's EBITDA declined 10% YoY for the second consecutive quarter, as digital commerce investments, input cost inflation and a shift in the festive calendar weighed on profitability.
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Brokerages remain positive on RIL, with ‘Buy' ratings across the recommendations in the notes reviewed. However, their target prices reflect differing expectations around the sustainability of O2C margins and the pace of retail recovery. JPMorgan raised its target to Rs 1,675, while Jefferies maintained Rs 1,710. Emkay and Motilal Oswal, meanwhile, lowered their targets despite retaining ‘Buy' ratings.
O2C Delivers Record EBITDA, Retail Remains The Weak Link
Reliance's consolidated revenue increased 7% quarter-on-quarter (QoQ) to Rs 3.31 lakh crore in Q2 FY27. EBITDA rose 19% to Rs 56,616 crore from Rs 47,517 crore, marking its biggest quarterly increase in 17 quarters. EBITDA margin improved to 17.1% from 15.4%.
O2C was the biggest growth driver, with EBITDA jumping 48% sequentially to Rs 25,203 crore, its sharpest increase in at least 27 quarters. Strong refining margins, improved petrochemical spreads, better product placement and feedstock sourcing supported the performance.
In contrast, Retail EBITDA fell 3% sequentially to Rs 6,120 crore. The segment faced pressure from digital commerce investments, input cost inflation, store rationalisation and the shift in the festive calendar. Its EBITDA margin contracted 103 basis points year-on-year to 7.3%.
Jio remained steady, with digital services EBITDA rising 18% YoY to Rs 22,200 crore, supported by subscriber additions and higher average revenue per user (ARPU).
Reliance's net debt declined to Rs 1.17 lakh crore from Rs 1.23 lakh crore in the previous quarter.
JPMorgan Raises Target, Jefferies Sticks To Rs 1,710
JPMorgan maintained its 'Overweight' rating on RIL and raised its target price to Rs 1,675 from Rs 1,625. The brokerage increased its FY27 and FY28 EPS estimates by 10.9% and 5%, respectively, expecting stronger refining margins and a recovery in retail to support earnings.
Jefferies maintained its 'Buy' rating and target price of Rs 1,710. It said consolidated EBITDA beat estimates by 6%, led by O2C, while retail EBITDA missed estimates by 6% due to quick-commerce investments and inflation. Jefferies raised its FY27 and FY28 EBITDA estimates by 6% and 2%, respectively, and expects strong winter refining profitability.
Emkay, Motilal Oswal Cut Targets Despite ‘Buy' Ratings
Emkay reiterated its 'Buy' rating but cut its September 2027 target price to Rs 1,550 from Rs 1,680. It raised its FY27, FY28 and FY29 EPS estimates by 15%, 8% and 3%, respectively, factoring in stronger O2C earnings. However, it lowered its blended valuation multiple from 13 times to 11.5 times, citing weaker retail performance and macroeconomic volatility.
Motilal Oswal also retained its 'Buy' rating but reduced its target price to Rs 1,520 from Rs 1,560. The brokerage expects consolidated EBITDA and adjusted profit to grow at a compound annual growth rate of 11-12% over FY26-FY28, led largely by Digital Services and O2C. It identified a recovery in retail growth and profitability as a key trigger for the stock.
Nuvama, Systematix See Upside; Kotak Flags Retail Profitability
Nuvama maintained its 'Buy' rating with a target price of Rs 1,703. It highlighted record O2C profitability and growth in digital services, but cautioned that persistent retail weakness could dilute the benefit of the earnings beat. The brokerage also sees the New Energy business contributing to earnings from FY28.
Systematix maintained its 'Buy' rating and set a revised sum-of-the-parts target price of Rs 1,400. It raised its FY27 EBITDA and PAT estimates by 13% and 16%, respectively, citing stronger O2C earnings and higher refining and petrochemical margins.
Kotak Neo maintained its 'Buy' rating and reinstated fair value at Rs 1,500. It sees strong refining and petrochemical margins supporting O2C, but said retail recovery will depend on festive demand and returns from digital commerce investments. The brokerage also identified the expansion of FMCG brands such as Campa and Independence as a growth opportunity.
What Could Drive Reliance Industries Shares Next?
The sustainability of refining margins, a recovery in retail profitability and the scaling up of New Energy projects will be key monitorables for RIL investors.
While strong O2C profitability has provided a significant earnings boost, the retail business remains an important variable in the company's growth outlook. Jio's steady performance offers another earnings support, while Reliance expects its New Energy business to begin contributing from FY28.
The brokerage outlook remains broadly constructive, but the next leg of growth will depend on whether Reliance can translate its record O2C performance into a more balanced recovery across its businesses.
READ | Reliance Q2 Scorecard: O2C Roars, Jio Expands, Retail Feels The Pinch — 10 Key Takeaways
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