RIL EBITDA margin hits seven-quarter high as O2C strength offsets retail weakness

ET Intelligence Group: The consolidated operating margin before depreciation and amortisation (EBITDA margin) of Reliance Industries (RIL) crossed double digits for the first time in seven quarters aided by strong performance from its oil-to-chemicals (O2C) division amid higher realisation and domestic sales of fuel products. This partially offset the weakness in the retail segment due to a shift in the festive season in 2025 to the second quarter compared with the previous year. The RJio business which hosts the group's telecom division reported double-digit top line growth, driven by net subscriber addition and improved average revenue per user (ARPU). The company is setting up a fully integrated battery manufacturing facility, spanning the entire value chain from cell packs to containerised energy storage systems. It aims to generate 300 billion units of renewable power annually, which is expected to fulfil the power requirement of its green energy initiatives. Analysts have reduced the consolidated profit estimates by around 3% for FY26-28 citing weaker retail growth and higher interest cost of the telecom vertical.126664819 The share of RIL's O2C segment in consolidated EBITDA touched a seven-quarter high of 32.4% with EBITDA margin touching 10.2% during the December quarter. The improvement in refining margins was a key driver of the O2C segment's performance. Singapore Gross Refining Margins (GRMs), which serve as a benchmark for Indian oil marketing companies, rose sharply to an average of $7.5 per barrel from $3.8 per barrel in the previous quarter, helped by stronger prices for diesel, petrol and aviation turbine fuel (ATF). Higher domestic fuel placement through the Jio-bp joint venture also aided earnings, with diesel sales rising 24.7% and petrol sales increasing 20.8% year-on-year. The retail segment's EBITDA grew by just 1% year-on-year to Rs 6,915 crore while the EBITDA margin declined 60 bps to 8% in Q3FY26. Changes in the GST rates, specifically on certain consumer durables, caused a temporary pause in demand before the new rates were implemented in September 2025, impacting sales momentum at the start of the quarter. The demerger of the Reliance Consumer Products (RCPL) business came into effect during the quarter which also affected the top-line growth for the main retail entity. Motilal Oswal Financial Services expects RJio to continue driving the overall growth over the next two years, helped by rising telecom tariff trajectory and improving market share. The broking firm has assigned ₹12 lakh crore of equity valuation to Jio Platforms, which is slated for a stock market debut, implying the value of RIL's stake at ₹590 per share. It has reiterated a buy rating on RIL while marginally reducing the target price to ₹1,750 from ₹1,790. The stock last traded at ₹1,457.6 on Friday on BSE.