Should you buy, sell or hold ahead of earnings?
On January 9, Goldman Sachs raised its 12-month price target on Reliance Industries to Rs 1,835 a share, implying an upside of about 25% from current levels. The brokerage has reiterated its Buy rating, arguing that near-term moderation in retail will be offset by improving refining fundamentals and steady momentum in telecom, keeping Reliance’s medium-term earnings trajectory intact.
The brokerage expects Q3 earnings growth in retail to moderate due to weak discretionary spending, base effects and festive timing. However, this is likely to be partly offset by a strong refining-led performance in the oil-to-chemicals (O2C) business. As a result, overall earnings remain largely unchanged despite tweaks at the segment level.
Nomura estimated Reliance Industries’ consolidated EBITDA at Rs 47,600 crore for 3QFY26F, reflecting a 4% quarter-on-quarter increase. While the refining segment is expected to deliver a strong performance, this could be partly offset by weaker petrochemical margins and a muted showing in the retail business. Meanwhile, Jio is likely to report steady operating performance during the quarter. Analysts have a Buy call and a target price of Rs 1,700 per share.
Within the Oil-to-Chemicals (O2C) segment, EBITDA is estimated at Rs 16,500 crore, up 10% QoQ, led by widening refining margins. The improvement is expected to be driven by sequential gains in gasoline, diesel and jet fuel spreads, although softer petrochemical margins may partially temper the overall upside.
For the Upstream business, Nomura forecasts EBITDA of Rs 4,900 crore, down 1% on-quarter. While lower volumes and softer average selling prices could weigh on performance, these headwinds are expected to be largely offset by favourable foreign exchange movements.
On the consumer side, retail operations are likely to see a softer quarter, reflecting a macro-driven slowdown in discretionary consumption. In contrast, Jio’s performance is expected to remain resilient. Nomura estimates Jio’s EBITDA at Rs 17,600 crore, up 2% in Q3, supported by an 8 million sequential increase in subscribers to 515 million and a modest rise in ARPU to Rs 214 per month from Rs 211 in the previous quarter.Reliance Industries shares have corrected about 8% over the past few trading sessions after outperforming the Sensex, Nifty and sector peers over the past year. Analysts attribute the recent pullback to investor concerns over the company’s exposure to Russian crude and a slowdown in retail growth momentum. However, Goldman Sachs believes these concerns are overdone and expects a limited impact on Reliance’s medium-term earnings outlook.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
