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Reliance Industries (RIL), the Indian conglomerate led by Mukesh Ambani, is poised to release its third-quarter (Q3) financial results for fiscal year 2025 (FY25). The anticipation surrounding these results has already influenced the share price, with a noticeable increase observed on the day preceding the announcement. While the overall picture is expected to be mixed, reflecting the diverse nature of RIL's business segments, analysts offer a range of perspectives on the company's current financial health and future prospects. The telecom arm, Jio, is projected to demonstrate strong earnings growth, driven by its expanding subscriber base and increasing average revenue per user (ARPU). This positive contribution is expected to somewhat offset the weaker performance anticipated from other sectors.
The refining and petrochemicals (O2C) segment, a cornerstone of RIL's operations, is projected to show muted earnings growth in Q3 FY25. Although a slight quarter-over-quarter (QoQ) increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is predicted, largely attributed to recovering refining margins, the year-over-year (YoY) comparison is expected to remain flat. This subdued performance is primarily attributed to ongoing restructuring within the sector. The retail division, another major contributor to RIL's revenue, is also anticipated to exhibit moderate growth, showcasing resilience despite the challenges of ongoing operational restructuring which are expected to impact earnings into Q4. These restructuring efforts, as highlighted by company management, are expected to continue to negatively impact short-term retail profits.
Despite the mixed outlook across RIL's diverse business units, analysts maintain varied opinions on whether investors should buy, sell, or hold RIL shares. Some analysts point to the recent decline in share price—approximately 20% over the past six months and more than 8% year-over-year—as a potential buying opportunity. They cite technical indicators, such as a bullish divergence in the Relative Strength Index (RSI), suggesting a potential reversal of the downtrend. The formation of a base around ₹1,200-₹1,230, in their view, further supports this analysis. Their recommendations often range from maintaining existing positions for long-term investors to suggesting new entry points at the current market price, with medium-term targets set around ₹1,340 per share. These analysts emphasize the underlying strength of certain RIL businesses, such as Jio and the potential for long-term growth fueled by factors like increasing store footprint in retail, improved operating leverage, and continued subscriber additions in the telecom sector.
However, a cautious approach is warranted given the mixed Q3 projections. The anticipated muted performance in the O2C segment and the continuing impact of restructuring on retail earnings warrant a thorough analysis of the risk-reward profile before making any investment decisions. While the strong performance of Jio provides a considerable positive factor, it's crucial to consider the overall impact of the other sectors and the ongoing strategic adjustments within RIL. Investors should independently assess their risk tolerance, investment horizon, and thoroughly review the complete Q3 results before making any buy or sell decisions. Furthermore, it's advisable to consult with a qualified financial advisor to discuss personal financial circumstances and investment strategies before taking any action.
The overall sentiment surrounding RIL's Q3 results is one of cautious optimism. The anticipated strength in the telecom segment and the potential for a reversal of the recent stock price downtrend provide a bullish counterpoint to the challenges facing the O2C and retail sectors. The release of the official Q3 results will provide greater clarity on the financial performance across all segments. Ultimately, whether investors should buy or sell RIL shares remains a complex decision that must be carefully weighed against individual risk profiles and future market conditions. The release of the full quarterly report is expected to provide substantial additional detail and insight to clarify the overall performance and future outlook for this major Indian conglomerate.
Source: Reliance share price gains ahead of Q3 results today. Buy or sell?