Analysts turned constructive on Reliance Industries Ltd. (RIL) after its June quarter of FY27 earnings exceeded expectations, with JPMorgan calling it "finally, a beat" and Macquarie saying stronger refining margins and robust growth in Jio helped the conglomerate deliver earnings ahead of consensus.
While brokerages agreed that the oil-to-chemicals (O2C) business emerged as the biggest positive during the quarter, they noted that the retail business remained under pressure. Even so, both brokerages believe Reliance's diversified earnings profile and multiple growth levers continue to support the investment case.
JPMorgan said commodity strength, the commissioning of new energy projects and attractive valuations remain key drivers for the stock, while Macquarie highlighted improving refining spreads, stronger upstream gas production and healthy momentum in the telecom business.
ere's What Brokerages Said After The Results:
JPMorgan
- Maintained Overweight with a target price of Rs 1,660.
- Described the June-quarter earnings as "finally, a beat", with a strong outperformance on the bottom line.
- Said the O2C business remained the key strength despite weakness in the retail segment.
- Noted that retail performance remained soft for another quarter.
- Continues to see commodity strength, commissioning of new energy projects and valuations as the key catalysts for the stock.
Macquarie
- Maintained Outperform with a target price of Rs 1,510.
- Said June-quarter earnings came in above consensus, led by stronger refining margins and growth in Jio.
- Highlighted healthy subscriber additions at Jio, slightly better-than-expected ARPU and improved telecom margins.
- Said the O2C business benefited from elevated refining spreads and improved crude sourcing conditions.
- Noted that upstream gas production increased during the quarter.
- Added that JioStar's revenue grew 14% year-on-year, supported by better manufacturing facility utilisation.
- Flagged that margins were impacted by the FMCG business merger, while interest expense rose 18% year-on-year as capital expenditure remained elevated at around $4 billion.
Reliance Industries Q1 Results
Reliance Industries reported a 23% sequential increase in consolidated net profit to Rs 20,946 crore, ahead of the Bloomberg consensus estimate of Rs 20,451 crore. Revenue rose 5% quarter-on-quarter to Rs 3.09 lakh crore, also exceeding analysts' expectations of Rs 3.01 lakh crore, while EBITDA increased 8% to Rs 47,517 crore. Operating margin expanded 40 basis points sequentially to 15.4%.
The O2C business was the standout performer, with revenue rising 9% quarter-on-quarter to Rs 2.02 lakh crore and EBITDA climbing 17% to Rs 17,010 crore, aided by stronger refining and petrochemical margins. The oil and gas segment also posted robust growth, with EBITDA increasing 19% to Rs 4,873 crore.
The retail business remained the weak link, with revenue declining 8% sequentially to Rs 90,409 crore and EBITDA falling 9% to Rs 6,309 crore. Meanwhile, Reliance Jio ended the quarter with 53.3 crore subscribers, while ARPU stood at Rs 215.60, broadly in line with Street expectations.
On Q1 performance, Mukesh D. Ambani, chairman and managing director of Reliance Industries Limited said, “Reliance has made a steady start to FY27, with all businesses delivering strong operating performance. Our diverse business portfolio has once again demonstrated its resilience in a quarter which witnessed continuing geopolitical tensions and volatile commodity markets.”
On the Jio Platforms IPO move, Ambani said, “During the quarter, Jio Platforms Limited filed its DRHP with SEBI, a significant step towards its public listing. The upcoming IPO will be an important milestone in Jio's journey and will give investors an opportunity to participate in India's digital growth story.”
“I remain confident in the underlying strength of our businesses and in the talent and commitment of our people. The start to FY27 gives me reason to be optimistic about the year ahead as we move forward with phased commissioning of new energy projects and unlock value through the Jio IPO,” he added.
Reliance Industries Share Price
RIL shares settled 2.59% higher at Rs 1,326.50 on Friday amid results buzz. By comparison, BSE Sensex closed 1.25% higher at 78,151.45 levels.
ALSO READ: RIL Q1 Results Key Takeaways: O2C, Oil & Gas Drive Growth As Retail Tumbles To 20-Quarter Low
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