Reliance Q1 Results Preview: O2C, Jio to drive earnings - Key things to watch out for

Reliance Q1 Preview: Reliance Industries Ltd. (RIL) is set to announce its financial results for the April-June quarter (Q1 FY27) on Friday, July 17, with the company expected to report its earnings after market hours.

While analysts broadly expect another quarter of healthy consolidated growth, the underlying business performance is likely to remain mixed, with a sharp recovery in the oil-to-chemicals (O2C) business and continued strength in Jio expected to offset weakness in retail consumption and lower earnings from the upstream oil and gas segment.

Brokerage estimates suggest Reliance could post double-digit growth in revenue and operating profit during the quarter, supported primarily by stronger refining margins, improved petrochemical spreads and sustained momentum in its telecom business. However, analysts remain cautious on the retail business amid muted consumption trends and expect the upstream business to remain under pressure due to lower production from the KG-D6 block.

Net profit estimates vary across brokerages, with consensus projections ranging from ₹16,200 crore to ₹18,470 crore, reflecting growth of up to 10% year-on-year. Most brokerages expect consolidated EBITDA to grow in the 4% to 10% range year-on-year, while revenue is estimated between ₹3.09 trillion and ₹3.20 trillion.

Analysts will closely monitor management commentary on O2C margins, retail demand, telecom tariff hikes, Jio's average revenue per user (ARPU), subscriber additions and future capital expenditure plans.

Brokerages remain broadly constructive on Reliance's earnings outlook, although expectations differ across businesses.

Equirus Securities expects consolidated net sales to rise 35% year-on-year to ₹3.28 trillion, EBITDA to increase 14.5% to ₹49,100 crore, and net profit to grow 13% year-on-year to ₹24,593 crore. However, it expects EBITDA margins to contract by 267 basis points year-on-year to 15%, although margins are likely to remain flat sequentially.

Systematix Institutional Equities has a relatively more conservative outlook. The brokerage expects net sales to increase 27% year-on-year to ₹3.09 trillion, while EBITDA is seen rising 9.9% to ₹47,100 crore, supported by a recovery in O2C and steady performance across the retail and telecom businesses.

Unlike Equirus, however, Systematix expects profit after tax (PAT) to decline by nearly 3% year-on-year to ₹19,700 crore, while EBITDA margin is estimated to contract by 237 basis points to 15.2%.

The O2C segment is expected to be the biggest earnings driver during the quarter as refining economics improve following a weak previous quarter.

Antique Stock Broking expects O2C EBITDA to increase 25% quarter-on-quarter, aided by stronger gross refining margins (GRMs) and improving petrochemical spreads. The brokerage, however, expects the upstream business to remain the weakest segment due to lower production from the KG-D6 gas fields.

Systematix Institutional Equities expects O2C revenue to rise 35% year-on-year and 13% sequentially, while EBITDA is estimated to grow 15% year-on-year, supported by stronger diesel cracks despite a volatile global environment.

Reliance's digital services business is once again expected to provide stability to consolidated earnings.

According to Nuvama Institutional Equities, digital EBITDA is likely to grow 11% year-on-year and 2% quarter-on-quarter, supported by continued improvement in ARPU and subscriber additions. The brokerage expects ARPU to increase 3% year-on-year and 1% sequentially, while the subscriber base is projected to expand 7% year-on-year and 2% quarter-on-quarter.

Brokerages believe Jio's resilient operating performance should continue to support overall earnings, even as investors await further clarity on future tariff hikes.