RIL’s EBITDA margin hits seven-quarter high as O2C strength offsets retail weakness

ET Intelligence Group: Reliance Industries’ (RIL) consolidated operating margin before depreciation and amortization (EBITDA margin) crossed double digits for the first time in seven quarters, helped by strong performance from its oil-to-chemicals (O2C) division amid higher realization and domestic sales of fuel products. This partially offset weakness in the retail segment due to a shift from the 2025 holiday season to the second quarter compared to the previous year. The RJio business, which houses the group’s telecom division, reported double-digit revenue growth, driven by net subscriber additions and improved average revenue per user (ARPU). The company is setting up a fully integrated battery manufacturing facility, covering the entire value chain, from cell packs to containerized energy storage systems. It aims to generate 300 billion units of renewable energy annually, which is expected to meet the power needs of its green energy initiatives.

Analysts have cut FY26-28 consolidated earnings estimates by around 3%, citing weaker retail growth and higher interest costs in the telecom sector.

RIL’s O2C segment share in consolidated EBITDA touched a seven-quarter high of 32.4%, while EBITDA margin touched 10.2% in the December quarter. Improving refining margins was a key driver of the O2C segment’s performance. Singapore Gross Refining Margins (GRMs), which serve as a benchmark for Indian oil marketing companies, rose sharply to an average of $7.5 per barrel from $3.8 per barrel in the previous quarter, helped by higher prices for diesel, gasoline and aviation turbine fuel (ATF). Higher domestic fuel sales through the Jio-bp joint venture also contributed to profits, with diesel sales up 24.7% and petrol sales up 20.8% year-on-year.

Retail segment EBITDA grew just 1% YoY to Rs 6,915 crore, while EBITDA margin declined 60 basis points to 8% in Q3FY26. Changes in GST rates, particularly on certain consumer durables, caused a temporary lull in demand before the new rates were implemented in September 2025, impacting sales momentum at the start of the quarter. The demerger of Reliance Consumer Products (RCPL) operations came into effect during the quarter, which also impacted the top retail entity’s sales growth.

Motilal Oswal Financial Services expects RJio to continue to drive overall growth over the next two years, aided by the upward trajectory of telecom tariffs and improving market share. The brokerage firm has allocated ₹12 lakh crore in equity valuation to Jio Platforms, which is slated for a stock market debut, implying that RIL’s stake is valued at ₹590 per share. It has reiterated its buy rating on RIL while marginally lowering the target price from ₹1,790 to ₹1,750. The stock last traded at ₹1,457.6 on BSE on Friday.