Retail segment likely to weigh on RIL's Q3 show even as Jio, O2C shine

RIL's Q3FY26 earnings may be a mixed bag, with weakness in the retail business likely to offset strong performance in Jio and refining-led gains in the O2C segment

Reliance Industries Ltd’s (RIL’s) results for the third quarter of 2025-26 (Q3FY26), which are to be announced on Friday (January 16), are likely to be a mixed bag, with weakness in the retail segment being offset partly by the energy business. While RIL, India’s most valued company, has outperformed the benchmarks over the past year, it has been trading weak since the start of calendar year 2026 (CY26) due to concerns related to refining exposure to Russian crude oil, and lack of growth acceleration in retail. Brokerages have, however, maintained their estimates for now.

 

Analysts led by Nikhil Bhandari of Goldman Sachs Research say, “We expect moderation in Q3 earnings growth in retail due to weak discretionary spend, base effects, and festive timing, but this is likely to be partly offset by a strong refining-led performance in energy. We have trimmed near-term retail growth assumptions and raised refining estimates, resulting in largely unchanged overall earnings.”

 

Most brokerages expect RIL’s consolidated operating profit to rise by 8-10 per cent over the year-ago quarter, driven by a 15 per cent year-on-year (Y-o-Y) growth each in oil-to-chemicals (O2C) and telecom verticals. What could remain a drag on this is the upstream business and the retail segments. The latter is expected to witness an 8-11 per cent Y-o-Y revenue growth and 6 per cent operating profit growth due to the demerger of the FMCG (fast-moving consumer goods) business and the quick commerce (qcom) segment.

 

JM Financial Research estimates retail gross revenue growth of 9 per cent Y-o-Y in the quarter. Analysts led by Dayanand Mittal of the brokerage expect the segment to be impacted to the tune of 2 per cent on account of Reliance Consumer Products demerger as well as full-quarter impact of reduced retail selling prices of its products after the goods and services tax (GST) rate cut and festive season being split between Q2FY26 and Q3FY26 as compared to Q3FY25. Further, the benefit of consumption boost due to GST cut was restricted to the electronics segment only, with limited benefit in grocery and fashion & lifestyle segments.

 

Most brokerages expect the operating profit margins in the retail segment to decline on a sequential basis due to ramping up of investments in the qcom business, which is witnessing good momentum.

 

On the O2C front, while refining received a boost, the petchem segment has remained weak. Sanjay Mookim and Atishy Rathi of JP Morgan Research point out that the sharp increase in diesel cracks through the quarter has driven average refining margins up meaningfully quarter-on-quarter (Q-o-Q). A weaker rupee will also help earnings from this segment.

 

This refining upside though will likely be dampened by weaker petrochemical earnings, given lower ethane cracking margins and PVC (polyvinyl chloride) margins, which collectively might lead to only a moderate sequential increase in RIL’s overall O2C operating profit.

 

Telecom (Jio) is another bright spot in the Q3 results. Brokerages estimate that the telecom major’s revenues may grow 3 per cent on a sequential basis, led by subscriber additions and a slight uptick in average revenue per user (Arpu). The operating profit margins are likely to be largely flattish. Goldman Sachs Research expects an 18 per cent annual growth over FY26-FY30, with broadly similar growth in connectivity and non-connectivity businesses. Jio’s wireless subscriber base is now 20 per cent higher than that of Bharti while its home subscriber base is almost twice Bharti’s.