Market Expectations Analyzed
Brokerages are generally optimistic about RIL's consolidated operating profit, projecting an increase of 8-10% compared to the same quarter last year.
This positive outlook is largely driven by substantial growth in the oil-to-chemicals (O2C) and telecom divisions, specifically anticipating a 15% year-on-year growth in each. However, the upstream business and the retail segment are identified as potential drags on this overall performance. The retail segment is forecasted to experience an 8-11% year-on-year revenue growth, although its operating profit growth is anticipated to be around 6%, influenced by factors such as the demerger of the FMCG (fast-moving consumer goods) business and the quick commerce (qcom) segment. Despite these forecasts, there's a consensus on a mixed financial outcome, where gains in some areas are likely to be offset by setbacks in others.
Sectoral Performance Review
The third quarter of fiscal year 2026 (Q3FY26) is expected to exhibit a nuanced picture across RIL’s business segments. The O2C and telecom sectors are poised for robust performance, providing significant contributions to the company's financial results. In contrast, the retail segment is anticipated to face some headwinds, impacting overall profitability. Goldman Sachs Research, led by Nikhil Bhandari, anticipates a moderated earnings growth in retail. This is attributed to weaker discretionary spending, base effects, and changes in festive season timing. However, this downturn is expected to be cushioned by the solid performance of the refining operations within the energy sector. Adjustments in growth assumptions have been made, indicating a balanced outlook for the period.
Impact of Retail Demerger
The retail segment's expected performance in Q3FY26 is influenced by strategic corporate actions, specifically the demerger of the FMCG business and the quick commerce (qcom) segment. While the retail revenue is still slated to increase by 8-11% year-on-year, the operating profit growth is projected at about 6%. The demerger is designed to streamline operations and potentially unlock value, but it is expected to create temporary shifts in financial figures. The quick commerce segment's integration and impact are considered as significant factors influencing the overall retail performance during the assessed quarter. These adjustments demonstrate a concerted effort by RIL to refine its business portfolio while managing the financial outcomes.
Analyst Perspectives & Outlook
The upcoming Q3FY26 results are receiving scrutiny from analysts, with Goldman Sachs Research offering key insights. Their analysis indicates that while the retail segment may face challenges, the energy sector is positioned to provide a stabilizing effect. Nikhil Bhandari of Goldman Sachs suggests that the strong refining-led performance within the energy division may offset the weaknesses in the retail segment. This balanced outlook is reflected in the revised earnings estimates, which anticipate a largely unchanged overall financial outcome. These insights are critical for investors to understand the interplay of various business units and how they collectively shape RIL’s financial trajectory during the period. The anticipated results, to be announced on January 16, underscore the importance of sector-specific strengths.
Factors Affecting Performance
Several market dynamics have influenced Reliance Industries Ltd.'s (RIL) performance. While the company has shown resilience over the past year, it has experienced some weakness since the beginning of calendar year 2026 (CY26). This is influenced by concerns surrounding the refining exposure to Russian crude oil and the slower growth observed within the retail segment. Despite these concerns, brokerages generally maintain their financial estimates for the company. The company’s ability to navigate geopolitical and economic shifts is crucial to maintaining a strong financial position. The upcoming Q3FY26 results will offer critical insights into how RIL has managed these various challenges and opportunities during the quarter.
