Reliance shares slip 3% as Q1 misses estimates; more selling ahead?

RIL 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

Shares of Reliance Industries Limited (RIL) fell over 3 per cent on Monday after the conglomerate’s margin and profit for the first quarter of 2025-26 (Q1FY26) turned out to be below the Street’s expectations. The stock of India’s most-valuable company closed 3.21 per cent lower at ₹1,428.60 per share, compared to a 0.49 per cent advance in the benchmark Nifty 50 index. This is the steepest fall for RIL stock since April 4, 2025.

 

In Q1FY26, the oil-to-telecom conglomerate reported a 78.3 per cent year-on-year (Y-o-Y) growth in net profit at ₹26,994 crore. This was largely due to a one-off gain from its stake sale in Asian Paints. 

 

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 at ₹2.43 trillion. The slower revenue growth was largely due to a contraction in its oil-to-chemicals (O2C) and oil & gas businesses. In comparison, both Jio Platform and Reliance Retail reported double-digit Y-o-Y growth in net sales during the quarter.

 

Analysts at Emkay Global said that consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) 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 O2C segment from refinery closures while Retail and Jio are expected to accelerate, aiming to double group Ebitda over the next four-five years, Emkay said. 

 

Nuvama Institutional Equities noted that 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.

 

Nomura trimmed its FY27 Ebitda estimate by 3 per cent, citing lower Ebita for digital business and lower estimates for the O2C business. However, the brokerage 

 

remains optimistic about RIL’s medium-term outlook, citing the scale-up of the firm’s New Energy (NE) business, tariff hikes for Jio that are expected to directly boost profitability, and a potential initial public offering, or listing of Jio.

 

Despite missing estimates, analysts remained bullish on the Mukesh Ambani-led conglomerate, driven by the growth prospects in the NE business.

 

Analysts at Nomura believe 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 battery manufacturing and deployment.

 

“We believe the new energy business could be the next growth driver for Reliance, with the company targeting world-leading scale in integrated solar solutions and battery manufacturing and implementation,” Nomura analysts said.

 

The NE rollout is expected to ramp up over the next four-six quarters, and could contribute over 50 per cent to profit after tax, potentially unlocking an enterprise value of $20 billion, according to Nuvama.

 

Shares of the company fell for the third straight day and fell over 7 per cent from their recent peak of ₹1,541.5 per share on July 7. The counter has risen 17.5 per cent this year, compared to a 6.1 per cent advance in the benchmark Nifty 50.