Margin pressures drag down Reliance Industries' profit to 4-quarter low

Retail, oil & gas divisions remain laggards

Reliance Industries Ltd (RIL) in Q3FY26 clocked consolidated revenues that were ahead of market expectations but its profits, on lower margins, were slightly lower than what the street anticipated.

 

The company’s consolidated net sales were up 10.4 per cent year-on-year (Y-o-Y) to a record high of ₹2.65 trillion in October-December, up from around ₹2.4 trillion in Q3FY25 and around ₹2.55 trillion in Q2FY26.

 

Analysts’ average estimate was around ₹2.61 trillion as compiled by Business Standard in the earnings preview of Nifty 50 companies earlier this year.

 

The company’s consolidated net profit (attributable to owners or shareholders) was up just 0.6 per cent Y-o-Y to ₹18,645 crore from ₹18,540 crore in Q3FY25 and ₹18,165 crore in Q2FY26. This was RIL’s lowest quarterly net profit in the last four quarters, including Q3FY26. The company’s consolidated net profit has now moved in a range of ₹17,000 crore-20,000 in the last 12 quarters, beginning Q4FY23.

 

 

Its reported consolidated net profit is around 8 per cent lower than the analysts’ average estimate of ₹20,169.6 crore as compiled by Business Standard earlier this week.  

 

The company’s standalone net sales (largely reflecting its oil refining and petrochemical production business) were around ₹1.21 trillion from ₹1.24 trillion in Q3FY25 and around ₹1.26 trillion in Q2FY26. Its standalone net profit was up 7.7 per cent Y-o-Y to ₹9,396 crore from ₹8,721 crore in Q3FY25 and ₹9,129 crore in Q2FY26.

 

Standalone operations reported a Y-o-Y and quarter-on-quarter (Q-o-Q) rise in margins of earnings before interest, tax, depreciation and amortisation from lower raw material costs.

 

The business also gained from a Y-o-Y decline in interest and depreciation costs.

 

The company’s digital services, including telecom, outperformed with double-digit growth in revenue and segment profits (earnings before interest and taxes). In comparison, the retail and oil & gas divisions were laggards.

 

Revenues of the retail division were up 8.4 per cent Y-o-Y while segment earnings before interest and taxes (Ebit) were up just 0.3 per cent Y-o-Y.

 

Nearly 73 per cent of RIL’s consolidated Ebit in Q3FY26 were accounted for by its oil to chemicals (O2C) and digital services business.

 

Commenting on the results, Mukesh D Ambani, chairman and managing director, RIL, said: “Reliance’s consolidated performance in 3Q FY26 reflects consistent financial delivery and operational resilience across businesses. Reliance is entering a new phase of value creation with its initiatives in the AI (artificial intelligence) and New Energy domains.”

 

The company’s earnings in the third quarter were hit by higher raw material costs, leading to a Y-o-Y and Q-o-Q decline in Ebitda margins.

 

The company’s consolidated raw material costs, including the purchase of finished goods and changes in inventories of finished goods, were up 12.2 per cent Y-o-Y.

 

The company’s Ebitda margins in Q3FY26 were the lowest in the last three quarters and nearly 70 basis points lower than three-year average margins of 19.3 per cent.

 

The company reported a consolidated Ebitda of ₹51,055 crore, up 6.4 per cent Y-o-Y from ₹48,003 crore in Q3FY25 and ₹50,367 crore in Q2FY26.

 

RIL’s consolidated net profit growth in the third quarter was also adversely affected by relatively quick growth in depreciation allowance (especially at its telecom business and corporate income tax including deferred tax).

 

Its consolidated depreciation allowance reached ₹14,622 crore from ₹13,181 crore in Q3FY25 and ₹14,416 crore in Q2FY26.

 

Deferred taxes were up 40.9 per cent Y-o-Y to ₹4,391 crore from ₹3,116 crore in Q3FY25 while overall corporate income tax was up 10.1 per cent to ₹7,530 crore from ₹6,839 crore in Q3FY25.

 

Consolidated profit before tax (PBT) was ₹29,697 crore from ₹28,643 crore in Q3FY25 and ₹29,124 crore in Q2FY26.

 

The company’s PBT margins were down 70 basis points Y-o-Y to 11.1 per cent in Q3FY26 from 11.8 per cent (of total income) a year ago.

 

In comparison, RIL’s profit after tax margins slipped to 6.9 per cent (of total income) in Q3FY26, down 70 basis points from 7.6 per cent in Q3FY25.

 

Jio Platforms Ltd (JPL), which runs Reliance Jio, India’s largest telecom network, reported a net profit of ₹7,629 crore for the third quarter, up 11.2 per cent from the same quarter last financial year. The higher numbers came on the back of growth driven by robust subscriber addition, growth in revenue per user, and the scale-up of digital services, the company said in a statement Friday.

 

Revenues of JPL stood at ₹43,683 crore for Q3FY26, representing a 12.7 per cent year-on-year increase. Sequentially, profit was up 3.4 per cent in Q3FY26, from ₹7,379 crore in Q2Fy26, while revenues were up 2.4 per cent from ₹42,652 crore recorded in the previous quarter

 

Reliance Retail Ventures reported a 2.1 per cent on-year rise in its net profit at ₹3,558 crore for the third quarter.

 

The retail division’s revenues from operations came in at ₹86,951 crore, up 9.2 per cent year-on-year, while its gross revenues were up 8.1 per cent to ₹97,605 crore. Sequentially, its revenues from operations were up 9.9 per cent and its net profit was 3.5 per cent.