Reliance Industries Ltd (RIL) is poised to announce its Q2 FY26 results today, October 17, 2023. Analysts anticipate robust performance driven by its telecom division, Jio, and the oil-to-chemicals (O2C) sector. Investors are particularly focused on updates regarding the company’s new energy initiatives and the potential initial public offering (IPO) for Jio.
Revenue and Profit Outlook
Analysts expect RIL to report double-digit growth in both revenue and net profit compared to the previous year. According to Motilal Oswal Financial Services, the company’s consolidated revenue is projected to increase by 6.5% year-on-year (YoY) to approximately ₹2.46 lakh crore. Adjusted net profit could surge by 22% YoY to around ₹20,200 crore. The brokerage also estimates that earnings before interest, taxes, depreciation, and amortization (EBITDA) will grow by 17% YoY to ₹45,800 crore, with margins improving to 18.6%, up from 16.9% last year.
In a more optimistic forecast, Kotak Institutional Equities anticipates an 11.3% rise in revenue and a 10.3% increase in adjusted profit after tax (PAT). The expected rise in EBITDA of 12% YoY is driven by better refining margins and increased subscriber revenue from Jio.
Business Segment Outlook
The oil-to-chemicals segment is expected to be a significant contributor to RIL’s revenue, bolstered by refining margins and increased throughput. Analysts predict that EBITDA for this segment could rise nearly 20% YoY, despite low petrochemical spreads.
On the other hand, the telecom division, Reliance Jio, is anticipated to deliver stable growth with an EBITDA increase of 14-17%. The average revenue per user (ARPU) is expected to experience a slight uplift to between ₹211 and ₹212, along with the addition of more than 5 million new subscribers. The potential IPO for Jio, slated for 2026, is viewed as a significant growth catalyst.
The retail sector is also projected to show promising growth, with EBITDA increasing by 11-15%, spurred by network expansion and heightened demand during the festive season. Nevertheless, the sector faces challenges due to a larger base and cautious consumer spending.
In contrast, the oil and gas business may experience a subdued performance, with EBITDA expected to hover around ₹4,900 crore due to reduced gas production and weak pricing.
Key Focus Areas for Investors
Beyond the financial metrics, investors will keenly watch for management insights on several strategic areas. These include updates on the ₹75,000 crore new energy initiatives, which encompass solar, hydrogen, and battery storage projects. Additionally, progress on the Jio IPO and the potential demerger of the consumer business will be scrutinized.
Cash flow trends and capital expenditure outlook remain critical considerations, as investors express caution regarding high capital expenditure cycles. Furthermore, the performance of the retail network, particularly premium formats, is expected to be a focal point.
Despite a recent decline of nearly 6% in RIL shares, which has resulted in a loss of approximately ₹1.8 lakh crore in market capitalization, analysts maintain a moderately optimistic outlook. They highlight Reliance’s diverse growth levers across energy, telecom, retail, and new energy sectors.
“The next six months will be crucial in shaping Reliance’s transformation into a clean energy and consumer-tech giant,” stated Saurabh Jain, Vice President of Research at SMC Global Securities. Investors and market analysts alike will closely monitor the results and management commentary for insights into the company’s strategic direction and performance.
