Reliance Industries' Q3 Performance Surpasses Expectations: Retail and O2C Lead the Charge

Reliance Industries Ltd. showcased a strong performance in Q3 FY25, driven by a robust recovery in Retail and Oil-to-Chemicals segments. Consolidated EBITDA rose to Rs 438 billion, exceeding analyst forecasts. Analysts anticipate continuing growth and multiple catalysts for 2025, including energy ventures and digital expansion.

Reliance Industries Ltd. (RIL) has reported an impressive performance for the third quarter of FY25, with key analysts from leading financial institutions praising the company's unexpected resilience in its Retail and Oil-to-Chemicals (O2C) sectors. The consolidated EBITDA was recorded at Rs 438 billion, marking a 12.1 percent increase sequentially and a 7.7 percent rise year-on-year. This figure exceeded consensus estimates by 5 percent.

Jefferies noted that Reliance Retail's resurgence signifies a possible end to its previous challenges. The segment surpassed expectations, driven by innovative initiatives like express deliveries across 4,000 pin codes. In the O2C arena, improved refining prospects are anticipated to enhance profitability in FY26. Further advancements in Retail, potential tariff hikes, and the anticipated listing of Jio are expected to act as major growth triggers next year.

According to JM Financials, the retail segment significantly propelled RIL's performance, with its EBITDA surpassing predictions by 8 percent. Both Bank of America and Citi acknowledged the Retail revival, which reversed its lackluster performance from previous quarters. HSBC Global Research underscored the ongoing retail momentum as a pivotal growth catalyst for 2025, also highlighting new energy initiatives and digital momentum as noteworthy factors.

The O2C sector, which contributed 61 percent of RIL's profit after tax, played a crucial role in the company's success, according to Nuvama, who cited a 16 percent sequential rise in O2C EBITDA due to improved refining margins. UBS emphasized the impact of refining spreads and festive demand, while Goldman Sachs highlighted O2C's earnings exceeding expectations.

Jio's performance presented a mixed yet promising picture. While its EBITDA missed Jefferies' forecasts owing to lower average revenue per user and high costs, UBS reported a 17 percent year-on-year increase with steady EBITDA margins at 53 percent. Analysts from HSBC Global Research and Goldman Sachs view upcoming tariff hikes and digital momentum as potential enhancers for this segment.

Nomura and JP Morgan spotlighted the sequential improvement in consolidated earnings, attributing it to Retail recovery and refining strength, which might support RIL's stock in the short term. HSBC Global Research foresees multiple growth catalysts in 2025, pointing to new energy projects and digital advancements. Overall, analysts maintain a positive outlook on RIL's path, expecting stronger returns in FY26, driven by its diversified business strategies and innovative initiatives.

(With inputs from agencies.)