RIL Q4 review: After muted show in energy biz, analysts see margin recovery ahead; shares flat

The NSE filings released on Friday showed that RIL’s net profit for the March quarter dropped 13% to ₹16,971 crore, compared to ₹19,407 crore in the same period a year ago, according to the consolidated financial statements.

During the pre-market opening session on NSE, RIL shares were down around 2% to ₹1,300 after investors reacted to subdued Q4 earnings and the impact of the West Asia crisis on the company's profits.

As of 9:44 am, RIL shares were trading 0.16% lower at ₹1,325.70 on Monday, compared to ₹1,327.80 at the previous market close, according to the exchange data.

Investors were trading based on the mixed bag earnings of the company, backed by analysts expecting margin recovery ahead for the company in the upcoming quarters.

Muted Q4 earnings

Reliance Industries, after market hours on Friday, April 24, announced that although the company recorded a 13% YoY fall in net profits, the revenue from core operations witnessed a 13% rise in the January to March quarter to ₹2.98 lakh crore, compared to ₹2.65 lakh crore in the same period a year ago.

Due to the impact of the higher crude oil prices and the supply chain disruptions, RIL’s input costs for the fourth quarter rose 20% to over ₹1.28 lakh crore, compared year-on-year with ₹1.07 lakh crore in the same period a year ago.

The filing also highlighted that Reliance’s earnings per share (EPS) dropped to ₹12.54 apiece in the March quarter, compared to ₹14.34 apiece in the same period a year ago.

RIL’s reported operating profit or earnings before interest, taxes, depreciation, and amortisation (EBITDA) of ₹44,141 crore in the fourth quarter; however, the EBITDA margin took a hit, dropping to 14.78% in Q4, compared to 16.57% in the same period a year ago.

Segmental revenue snapshot

RIL’s consolidated filings also showed that the company’s key business segment, Oil to Chemical (O2C), recorded a 12.3% jump to ₹1.84 lakh crore in the March quarter, compared to ₹1.64 lakh crore in the same period a year ago.

Although the O2C segment recorded a 12.3% jump, the segment’s EBITDA dropped 3.7% to ₹14,520 crore in the fourth quarter, compared to ₹15,080 crore a year ago. The revenues for all the segments were rising, backed by strong business momentum.

In the case of Reliance’s Oil & Gas business, the revenues dropped 8.8% to ₹5,867 crore in the fourth quarter of FY2025-26, compared to ₹6,440 crore in the same quarter of the previous fiscal year.

The Oil & Gas segment’s EBITDA witnessed an 18% fall to ₹4,195 crore in the March quarter, compared to ₹5,123 crore in the same period a year earlier.

Telecom giant and Reliance subsidiary, Jio Platforms' revenues witnessed an over 12% YoY rise to ₹45,946 crore as compared to ₹40,861 crore in the same quarter of the previous financial year.

Jio’s EBITDA also surged 16% to ₹20,041 crore in Q4 earnings, compared to ₹17,278 crore in the same period a year ago, driven by strong subscriber growth and higher average revenue per user (ARPU).

RIL’s retail arm, Reliance Retail, recorded an 11% rise in its revenues to ₹87,344 crore in the March quarter, compared to ₹78,622 crore a year ago. At the operational level, the segment’s EBITDA increased 3.1% to ₹6,921 crore, compared year-on-year with ₹6,711 crore in the same period a year earlier.

Margin recovery ahead?

Analysts from the global investment giant, Goldman Sachs, said that RIL’s sequential margin is expected to recover in the upcoming quarters. The company’s retail growth remains strong, but the margins of RIL are impacted by quick commerce.

“High crude premiums and logistics costs offset strong product cracks. Petchem mixed with pressure in naphtha chain. Sequential margin recovery expected in coming quarters,” said the experts.

On the margin concerns for the O2C segment, experts from CLSA noted that the US-Iran conflict, creating a lack of availability of resources at a higher price, has weighed down on the segment’s profitability despite revenue rise.

“It explained Iran war-led challenges of availability, extreme price volatility & spike in insurance plus shipping costs made margin capture very difficult in O2C,” said the analysts.

“Strong performance of yet-to-be valued FMCG & media businesses, confidence in the approaching commissioning of new energy capacity in solar & battery manufacturing, along with rising momentum in hyper-local businesses were key positives,” they said.

Experts from the Japanese investment giant, Nomura, highlighted that looking forward, all eyes will not be on the Jio IPO, which remains a key catalyst for the share price of the company in the future.