Reliance tops estimates as petrochemicals business stands firm in a turbulent first quarter
Mumbai: Reliance Industries Ltd delivered a better-than-expected start to FY27 as a resilient oil refining and petrochemicals business weathered severe disruption in global energy markets
Mumbai: Reliance Industries Ltd delivered a better-than-expected start to FY27 as a resilient oil refining and petrochemicals business weathered severe disruption in global energy markets triggered by the US-Iran conflict, more than offsetting weakness in its retail arm. The earnings beat came despite expectations that geopolitical tensions and volatile energy markets would weigh on Reliance’s flagship oil-to-chemicals (O2C) business, which contributes more than half of the company’s consolidated revenue. India’s most valuable company reported a consolidated profit of ₹20,946 crore attributable to owners in the first quarter, ahead of a consensus estimate of ₹19,823 crore of analysts polled by Bloomberg. This was a 12% increase over the same period last year, after accounting for a one-time gain of ₹8,924 crore made then by a stake sale in Asian Paints Ltd. Quick answers to key questions • 5 QUESTIONS 1 Why did Reliance Industries report a higher-than-expected profit in Q1FY27? ⌵ Reliance Industries reported a better-than-expected profit due to strong performance in its oil-to-chemicals (O2C) business, which significantly offset weakness in its retail arm, amidst geopolitical tensions and volatile energy markets. 2 How did the oil-to-chemicals (O2C) segment perform in Q1FY27 compared to expectations? ⌵ The O2C segment performed well in Q1FY27, with revenues up nearly 30% year-on-year to ₹2 trillion, higher than analysts' expectations despite anticipated market turbulence.
3 What factors contributed to Reliance's profit growth despite a decline in its retail arm? ⌵ Profit growth was mainly driven by strong performances in the O2C and digital services segments, which helped mitigate the impact of a 14% decline in retail profits. 4 What was the impact of geopolitical tensions on Reliance's business in Q1FY27? ⌵ Geopolitical tensions led to severe disruption in global energy markets, but Reliance managed to maintain strong operational performance, particularly in its petrochemicals business. 5 Should investors consider the upcoming Jio Platforms IPO a good opportunity? ⌵ Investors might view the upcoming Jio Platforms IPO as a significant opportunity to participate in India's digital growth story, especially given Jio's strong performance and market position. Also Read | Jio likely to begin IPO marketing from next week “Reliance has made a steady start to FY27, with all businesses delivering strong operating performance,” Mukesh Ambani, the company’s chairperson and managing director said in a statement. “Our diverse business portfolio has once again demonstrated its resilience in a quarter which witnessed continuing geopolitical tensions and volatile commodity markets.” The Mumbai-headquartered heavyweight’s consolidated topline for Q1 was higher by 25% year-on-year at ₹3.1 trillion. Earnings before interest, tax, depreciation and amortization (Ebitda) grew by a tenth to ₹47,517 crore, while Ebitda margin slipped by 201 basis points (bps) to 15.2%.
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