Rs 23,196 crore: inside Reliance’s surprise Q1 beat despite a profit fall

Reliance Industries reported consolidated profit of Rs 23,196 crore for the first quarter of FY27 on Friday, comfortably ahead of analysts’ average forecast of Rs 18,550 crore, even though the figure marked a 25% decline from the same quarter a year earlier. The year-ago quarter had been boosted by a one-off gain of Rs 8,924 crore from Reliance’s sale of its stake in Asian Paints, a gain that did not recur this time, which explains most of the year-on-year drop.

Looking past that one-off comparison, the underlying operating numbers were strong. Revenue rose 25% to Rs 3.1 lakh crore, lifted by the oil-to-chemicals (O2C) division and Jio’s digital services business. Ebitda increased 10% to Rs 51,403 crore, though expenses also rose, up 27% to Rs 2.9 lakh crore.

The O2C division, which made up 33% of Reliance’s total operating profit, saw its ebitda rise 17% year-on-year to Rs 17,010 crore. The company credited stronger transportation fuel and downstream margins, higher crude sourcing from Russia and Latin America, and lower-cost ethane feedstock for the improvement. Working against the division were higher crude, freight and insurance costs, along with losses from holding domestic fuel prices steady and the reintroduction of the special additional excise duty on diesel, petrol and aviation fuel.

Mukesh Ambani, chairman and managing director, said: ‘Reliance has made a steady start to FY27, with all businesses delivering strong operating performance despite continuing geopolitical tensions and volatile commodity markets. This makes me optimistic about the year ahead as we advance our new energy projects and the Jio IPO.’

Elsewhere in the group, retail ebitda stayed broadly flat at Rs 6,309 crore, down 1%, even as revenue grew 8%, while oil and gas ebitda held steady at Rs 4,973 crore. Ebitda from smaller businesses, including media and consumer products, fell 28% to Rs 1,856 crore, though entertainment platform JioStar’s ebitda rose 31% to Rs 933 crore on strong revenue growth. Reliance’s cash balance of Rs 2.46 lakh crore continued to comfortably cover its net debt of Rs 1.22 lakh crore.

Image: Wikimedia Commons/by World Economic Forum