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Reliance shares slip 2% as Q1 misses estimates; more selling ahead?
The stock of India's most valuable company fell as much as 2.52 per cent during the day to ₹1,438 per share, the lowest level since June 20 this year. RIL scrip was the top dragger in the Nifty 50 index, down 0.30 per cent as of 9:35 AM.
RIL Q1 results
The oil-to-telecom conglomerate reported a 78.3 per cent year-on-year (Y-o-Y) growth rate in net profit during Q1FY26, largely due to a one-off gain from its stake sale in Asian Paints.
The company's consolidated net profit jumped to a record high of ₹26,994 crore in Q1FY26 from ₹15,138 crore in Q1FY25. Excluding the gains from other income, its consolidated profit before tax was up by 14.4 per cent Y-o-Y, below the street's estimates.
RIL's consolidated net sales were slightly below expectations and were up 5.1 per cent Y-o-Y. The slower revenue growth was largely due to a Y-o-Y contraction in its oil-to-chemicals and oil & gas business. In comparison, both Jio Platform and Reliance Retail reported double-digit Y-o-Y growth in net sales during the quarter.
RIL Q1 breakdown
The O2C business reported a 1.5 per cent Y-o-Y decline in revenue during the first quarter, while its revenues were down 6 per cent Y-o-Y in the quarter. Net sales of the telecom and digital business were up 19 per cent Y-o-Y to ₹35,032 crore in Q1FY26 from ₹29,449 crore in Q1FY25. Net sales of its retail venture were up 11.3 per cent Y-o-Y to ₹73,720 crore in Q1FY26 from ₹66,260 crore a year before.
Analysts on RIL Q1 results
Nuavam Institutional Equities remained bullish on the conglomerate, mainly on its strong positioning for multidecadal growth driven by its New Energy (NE) ecosystem. The NE rollout is expected to ramp up over the next 4-6 quarters and could contribute over 50 per cent to profit after tax (PAT), potentially unlocking an enterprise value of $20 billion.
While Q1 Ebitda rose 11 per cent Y-o-Y, it fell short of estimates due to relatively weaker performance in the retail and O2C segments. Nuvama expects gross refining margins (GRMs) to remain above $10 per barrel and highlighted the potential re-rating of the O2C business, aligning with RIL's net-zero-carbon goal by 2035. Nuvama has maintained a 'Buy' rating on Reliance Industries with a target price of ₹1,767.
Emkay Global said that consolidated Ebitda and net profit came in below expectations, 5 per cent and 7 per cent short of estimates, respectively. Management remains optimistic, citing support for the oil-to-chemicals (O2C) segment from refinery closures in the West, while Retail and Jio are expected to accelerate, aiming to double group Ebitda over the next 4-5 years.
The NE ecosystem is projected to become fully operational within 4-6 quarters, with partnerships and a self-funded model expected in the long term, it said.
Nomura has reiterated its 'Buy' rating on Reliance Industries, while trimming its FY27 Ebitda estimate by 3 per cent and lowering the target price to ₹1,600. The brokerage remains optimistic on RIL's medium-term outlook, citing the scale-up of the company's NE business, tariff hikes for Jio that are expected to directly boost profitability, and a potential IPO or listing of Jio.
Nomura believes the NE vertical could emerge as RIL's next growth engine, with the company targeting global leadership in integrated solar solutions and energy storage system (ESS) battery manufacturing and deployment.
RIL share price history
Shares of the company fell for the third straight day and fell over 6 per cent from their recent peak of ₹1,541 per share on July 7. The counter has risen 19 per cent this year, compared to a 5.3 per cent advance in the benchmark Nifty 50. RIL has a total market capitalisation of ₹19.5 trillion.
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