Billionaire Mukesh Ambani-led Reliance Industries Ltd is set to report its Q3 results today, with analysts anticipating a tale of contrasting business performances—a surging refining division offsetting weakness in retail and petrochemicals, while the telecom arm maintains steady growth.

Overall Q3 Performance Expectations

The conglomerate's oil-to-chemicals segment is expected to be the star performer, with refining margins getting a significant boost from sharply higher diesel cracks and a weaker rupee. However, the retail business faces headwinds from quick commerce losses and consumption slowdown.

JP Morgan projects profit after tax growing at just over 1% year-on-year, calling this "a minor disappointment" given recent performance. ICICI Securities expects consolidated EBITDA to rise by 10% year-on-year and PAT to rise by 3% year-on-year. Jefferies noted that "RIL should report 10% YoY EBITDA growth led by O2C and Jio, with Retail likely soft on EBITDA drag from Q-Comm."

Top 5 Key Things to Watch

1. Refining Margin Surge and Sustainability

The quarter's headline story could be the sharp jump in gross refining margins, estimated up approximately 30% both quarter-on-quarter and year-on-year. Axis Capital points to higher cracks for diesel (+19% QoQ), petrol (+45% QoQ) and jet fuel (+40% QoQ) as primary drivers.

However, JP Morgan notes that "margins are down since," raising sustainability questions. HSBC flags that GRMs remain "negatively impacted by the loss of Russian oil volumes."

2. Quick Commerce Cash Burn Impact

JioMart's quick commerce push is bleeding the retail segment. Analysts warn that ramp-up in low margin quick commerce is likely to impact EBITDA margin, leading to low-to-mid single digit year-on-year growth. Axis Capital expects operational EBITDA margin to dip 50 basis points year-on-year to 8%, with JioMart quick commerce losses as a key factor.

3. Petrochemical Segment Pressures

While refining shines, petrochemicals remain under pressure. JP Morgan highlights weaker petrochemical earnings from lower ethane cracking margins and PVC performance will dampen refining upside. Axis points to "weaker spreads and higher ethane price" hurting petrochemical margins.

4. Jio's ARPU Trajectory

Average revenue per user remains the critical metric for Jio's earnings quality. Nomura estimates ARPU of ₹214 per month versus ₹211 in the previous quarter, representing a 1.3% quarter-on-quarter uptick according to Axis Capital. This improvement is partly attributed to discontinuation of the ₹249 plan in August.

5. Retail Consumption Reality Check

Retail revenue growth is expected at just 9-10% year-on-year, well below the usual mid-teens pace. Nomura attributes this to "a macro-led slowdown in retail consumption," while HSBC expects "weaker than guided performance on underlying market trends."

Market Positioning and Outlook

Reliance Industries currently trades at 10.7 times one-year-forward EV/EBITDA, at approximately 11% discount to its past five-year average, according to Axis Capital. The stock has lost over 7% of its value in the calendar year amid concerns around Russian crude oil exposure.

With multiple moving parts across its diversified portfolio, market watchers will focus on management commentary to gauge the outlook for coming quarters, particularly on retail consumption trends and quick commerce strategy.

Reliance Industries is expected to deliver steady performance in the December quarter, with brokerages projecting mid-single digit growth across revenue and profits. The performance will be supported mainly by strength in the oil-to-chemicals and digital businesses, even as retail growth remains muted and upstream continues to face pressure.

According to an average estimate of seven brokerages, RIL's consolidated revenue is expected to grow about 8.00% year-on-year in Q3, while profit after tax is seen rising around 7.00% from a year earlier. Consolidated EBITDA is projected to grow close to 9.00% year-on-year, with a modest sequential improvement.

Oil-to-Chemicals Business Leads Growth

The oil-to-chemicals business is expected to be the biggest driver of earnings growth during the quarter. Most brokerages expect a strong rebound in O2C EBITDA, aided by better refining margins and a weaker rupee.

Emkay forecasts an 11.00% quarter-on-quarter rise in O2C EBITDA to about ₹16,600.00 crore. YES Securities expects refining throughput to decline marginally by 0.60% year-on-year and 1.70% sequentially to 17.80 million metric tonnes, while GRMs are estimated at $13.60 per barrel.

Digital Services Show Steady Progress

The digital services business is expected to post steady growth, driven by continued subscriber additions and incremental improvement in average revenue per user.

Kotak Equities expects digital EBITDA to increase 16.50% year-on-year, though sequential growth is likely to be modest at about 2.70%. JM Financial expects ARPU to inch up 0.40% sequentially to around ₹212.00, supported by tariff upgrades.

Retail Segment Faces Headwinds

Retail is expected to remain the soft spot in RIL's portfolio, with growth impacted by higher competitive intensity and investments in quick-commerce.

YES Securities estimates retail revenue to grow 8.10% year-on-year and 7.90% sequentially to about ₹97,700.00 crore, with EBITDA margin at around 7.59%. Profitability could remain under pressure due to the ramp-up in quick-commerce initiatives.

Upstream Business Continues Decline

The upstream oil and gas business is expected to continue facing headwinds due to lower production and softer realizations.

Emkay expects upstream EBITDA to decline 4.00% sequentially to around ₹4,810.00 crore, while the natural decline in gas output continues to impact performance.

Overall Outlook

Brokerages expect RIL's December quarter performance to be anchored by strong O2C and digital earnings, which should more than offset the continued weakness in upstream and muted growth in retail. The company's diversified portfolio continues to provide stability, with the oil-to-chemicals and digital businesses compensating for challenges in other segments.