Reliance Industries is expected to report largely stable consolidated numbers for Q3FY26 on a quarter-on-quarter basis, with modest growth across revenue, operating profit and net earnings. Analysts anticipate steady execution in core segments with selective tailwinds in oil-to-chemicals and retail driving performance. The oil-to-telecom conglomerate is scheduled to announce Q3 results on Friday, January 16.

Financial Performance Overview

The company's October-December quarter is projected to show measured improvement across key financial metrics:

Operating margin is projected to improve to 18.7% from 18.0%, supported by better operating performance in key businesses.

Segment-wise Performance Analysis

Oil-to-Chemicals (O2C) - The Bright Spot

The O2C segment is expected to be one of the standout performers in the quarter. O2C Ebitda is projected to rise 6.5% quarter-on-quarter to ₹15,980 crore from ₹15,008 crore, marking the highest sequential jump in the last four quarters. Growth is likely driven by better refining margins and benefits from a weaker rupee, partly offset by continued weakness in the petrochemicals business.

Oil and Gas Exploration - Sharp Decline Expected

In contrast, the oil and gas exploration segment faces significant headwinds. Ebitda from this business is projected to fall 12% quarter-on-quarter to ₹4,388 crore from ₹5,002 crore, representing the biggest drop in the last 15 quarters. The decline is attributed to lower realisations and volumes during the quarter.

Retail Business - Steady Growth Amid Challenges

The retail segment is expected to deliver steady sequential growth despite year-on-year pressures:

However, year-on-year Ebitda growth is expected to remain weak due to a high base, influenced by losses in JioMart Quick Commerce and the demerger of Reliance Consumer Products. The festive season impact has been split between second and third quarters this year, compared with being concentrated in third quarter last financial year, further affecting comparability.

Jio Performance Metrics

Reliance Jio is expected to maintain steady growth momentum:

Average revenue per user is seen inching up to ₹213 from ₹211, marking the sixth consecutive quarter of ARPU growth. However, the pace of growth is the slowest in the last six quarters as the impact of earlier tariff hikes starts to taper off.

Key Focus Areas for Investors

Beyond headline numbers, investors will closely monitor several strategic aspects:

• Reliance's crude sourcing strategy and margin outlook in refining and petrochemicals
• Signs of retail growth pickup during the festive season
• Updates on the new energy business development
• Commentary on potential tariff hikes ahead of the Jio IPO
• Progress in Jio Fiber expansion
• Guidance on capital expenditure plans and debt levels

The demerger of Reliance Consumer Products and reduced retail selling prices following GST rate cuts are each expected to have a 2% impact on retail topline, adding to the complexity of year-on-year comparisons.

Reliance Industries has faced a challenging start to 2026, with shares declining approximately 7% year-to-date and the company shedding nearly ₹1.4 lakh crore in market capitalization. The selloff represents a dramatic reversal for a stock that outperformed the Nifty with a 29% rally in 2025, as investor concerns over Russian crude exposure and softer retail growth momentum trigger a sharp recalibration of expectations.

The market correction comes as the company prepares to report its December quarter earnings, with brokerages framing the upcoming results as a tale of contrasting business performance. While energy operations are expected to shine, the retail segment faces headwinds from weak discretionary spending patterns observed across organized retail peers.

Energy Segment Expected to Drive Q3 Performance

Brokerages anticipate strong performance from Reliance's Oil to Chemicals (O2C) segment in the December quarter. The energy division is projected to benefit from sustained refining upcycle momentum, with multiple analysts forecasting robust EBITDA growth.

Morgan Stanley expects December quarter EBITDA to rise 10.00% year-on-year, driven primarily by the 16.00% year-on-year EBITDA growth in the O2C segment. However, profit growth is projected to remain muted at just 1.00% year-on-year due to capitalization of interest and depreciation expenses, particularly for the telecom vertical.

Goldman Sachs projects O2C EBITDA to grow 11.00% quarter-on-quarter and 16.00% year-on-year, with stronger refining earnings expected to more than offset declines in petrochemical earnings. Axis Capital's Gaurav Malhotra projects consolidated EBITDA of ₹467.00 billion, representing growth of 2.00% quarter-on-quarter and 7.00% year-on-year.

Retail Segment Faces Growth Deceleration

The retail division, previously a key growth driver, now confronts significant headwinds. Goldman Sachs has lowered its sales growth expectation for Reliance Retail to around 10.00% year-on-year in the December quarter, down from an earlier estimate of 12.00% and significantly below the 21.30% growth posted in the September quarter.

Morgan Stanley estimates 9.00%-10.00% year-on-year retail topline growth, factoring in a 150 basis point negative impact from the demerger of the consumer products vertical. The moderation reflects weak discretionary spending, base effects, and festive timing shifts that have impacted the broader retail sector.

Russian Crude Concerns Addressed by Analysts

Despite market concerns over Russian crude exposure, Goldman Sachs argues these fears are overblown. The brokerage sees limited impact on the company's medium-term earnings profile, noting that refining fundamentals remain supported by tight product markets through 2027. Crude differentials across alternative grades, including Middle Eastern barrels, are improving and could help sustain strong refining margins even if Russian crude exposure were to reduce further.

Additional upside risks to refining margins exist in a scenario of revival in crude sourcing from Venezuela, with Morgan Stanley highlighting the strong performance of global refineries as supportive of their positive stance.

2026 Positioned as Catalyst Year

Brokerages maintain optimistic long-term outlooks, positioning 2026 as a pivotal year with multiple value-driving catalysts. Morgan Stanley remains overweight with a price target of ₹1,847.00, expecting investments over $80.00 billion to be monetized starting from 2026 as part of Reliance's fourth monetization cycle.

Jefferies maintains a Buy rating with a target of ₹1,830.00, projecting 13.00% consolidated EBITDA growth in FY27 with Jio expected to deliver the heavy lifting. The brokerage anticipates Jio to achieve 22.00% year-on-year revenue growth in FY27, supported by tariff hikes in the mobile segment and continued momentum in home broadband.

Valuation Support Emerges from Correction

The recent market correction has created attractive valuation opportunities. Axis Capital notes that Reliance trades at 10.70x one-year forward EV/EBITDA, representing approximately 11.00% discount to its past five-year average. Morgan Stanley expects a 12.00% earnings CAGR over FY25-28, driven by tight refining cycles, global involution in chemicals, new energy ramp-up, and monetization of retail and digital investments.