Reliance Q1 results today: Street expects healthy earnings. Is it the right time to buy RIL stock?

Mint

4 days ago

Reliance Q1 results today: Reliance Industries (RIL) will announce its June quarter (Q1) earnings on Friday, July 18, amid expectations of healthy year-on-year (YoY) growth in profit after tax (PAT) and earnings before interest, taxes, depreciation, and amortisation (EBITDA).
The Mukesh Ambani-owned oil-to-telecom-to-retail behemoth has experienced prolonged weakness in its core oil-to-chemicals (O2C) business, while the retail and telecom segments have emerged as new growth engines for the conglomerate.
Meanwhile, RIL share price has seen a solid gain of over 21 per cent this year till July 17. In comparison, equity benchmark Nifty 50 has risen nearly 6 per cent for the period.
Defying cautious market sentiment, Reliance share price climbed half a per cent on the NSE in early trade on July 18 ahead of its Q1 earnings.
Amid expectations of healthy earnings, investors face a tough question: Should they buy Reliance stock now or wait?
Reliance's Q1 PAT is expected to see a healthy one-off gain from the Asian Paints stake sale. EBITDA is also likely to jump on a healthy showing of core verticals, such as O2C, telecom, and retail.
"We expect RIL's consolidated EBITDA to rise by 15.4 per cent YoY (+2.1 per cent QoQ), with a 19-20 per cent YoY increase for O2C, digital and retail, offset by weak E&P (exploration & production). Reported PAT will be boosted by one-off gains of nearly ₹ 90 billion (post-tax) on Asian Paints stake sale," said Kotak Institutional Equities.
Kotak expects RIL's Q1 EBITDA for digital services to increase 3.7 per cent QoQ and 20 per cent YoY, driven by the continued flow-through of tariff hikes.
EBITDA for retail may rise 20 per cent YoY and 1.4 per cent QoQ, while for O2C, it may increase by 19 per cent YoY and 3.5 per cent QoQ on likely better margins, partly offset by refinery shutdown. However, Q1 EBITDA for E&P may decline 7.5 per cent YoY and 6 per cent QoQ on lower volumes and realisations, Kotak said.
Anubhav Sangal, Senior Research Analyst at Bonanza, expects the O2C segment to gain from higher GRMs and better petchem, whereas JIO is anticipated to benefit from increased ARPU and subscriber base. EBITDA margins for the retail segment are probably going to remain stable.
"Retail, digital services, and O2C EBITDA are forecast to expand by 19 per cent, 18 per cent, and 18 per cent, supporting RIL's anticipated 14.7 per cent YoY consolidated EBITDA growth. Meanwhile, downstream EBITDA may fall by 4 per cent as a result of lower crude prices. Jio's ARPU is expected to increase by 1 per cent on a quarterly basis to ₹ 210.3, with around 491.2 million subscribers," Sangal said.
Saurabh Jain, Equity Head, Research- Fundamentals, SMC Global Securities, expects Reliance to deliver a strong performance driven by resilience and operational strength across its core verticals, such as O2C, Jio, and retail.
Jain underscored that Reliance appears to be entering a phase of recovery and strategic momentum, particularly in the O2C segment, which had faced pressure in recent quarters due to volatile refining margins and weak petrochemical spreads.
However, improved refining economics and a modest rebound in petrochemical margins are likely to support a recovery in profitability.
In digital services, Jain expects Jio to report steady performance, driven by consistent subscriber additions and increasing penetration of fixed broadband, particularly through its 5G fixed wireless access solutions.
"Despite pressures from rising depreciation and financing costs associated with the 5G rollout, the segment continues to sustain margin and profit growth," said Jain.
"The retail segment is also expected to deliver steady performance, supported by consistent expansion in store footprint and improved operational efficiency, reflected in higher revenue per square foot. Key aspects to watch in the results include management commentary on green energy investments and the pace of monetisation in newer verticals," Jain said.
Several top brokerage firms consider Reliance stock a long-term buy due to the company's strong fundamentals and growth outlook.
Brokerage firm Motilal Oswal Financial Services has a buy call on the stock with a target price of ₹ 1,685.
Motilal expects Reliance's consolidated EBITDA to rise 17 per cent YoY to ₹ 453 billion.
Motilal said investors will focus on further clarity on ₹ 750 billion announcements in the new energy business, growth in retail store additions, and any pricing action in the telecom segment.
Fundamental factors favour the stock's long-term appeal. However, the recent sharp outperformance seems to have made technical experts sceptical.
"At the current juncture, Reliance faced resistance near the ₹ 1,550 mark, followed by a pullback toward its previous breakout zone. While the price has so far respected this support, the RSI has breached its prior support level, which raises caution," said Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers.
Reliance shares technical chart
"We recommend locking in profits in the ₹ 1,480–1,500 zone and waiting for a clearer structure or a decent pullback before considering fresh entries," said Patel.
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