Mukesh Ambani-led Reliance Industries (RIL) is likely to post muted fourth-quarter margins, according to Goldman Sachs, with earnings growth likely to resume in this financial year (FY).
The global research firm highlighted that the market will focus mainly on the retail segment growth trends and the residual tariff hike-driven growth in Jio. “We expect to hear from the company on guidance for retail growth into FY26 and updates to new energy capacity construction progress,” it said in a note on March 28.
The conglomerate’s net asset value has moderately improved but remains wide relative to the historical average amid a flat operational margin in FY25 and an earnings downgrade cycle. Goldman Sachs believes that earnings growth will resume in FY26, driven by a rebound in retail earnings before interest, taxes, depreciation and amortization (Ebitda) growth, acceleration in Jio’s earnings growth to 24 per cent and improving refining margins.
The brokerage maintained a ‘buy’ rating on the stock with a target price of ₹1,640 per share, an upside of 28 per cent since the note was published on March 28. Goldman Sachs continues to see favorable risk-reward with the stock trading near one-standard deviation below its historical mean on forward enterprise value to Ebitda.
Energy Busniess
Goldman Sachs expects energy margins to decline sequentially due to weaker oil-to-chemical earnings. They expect a sequential decline in refining in the fourth quarter driven by weaker Singapore refining product cracks and higher crude premiums, suppressing Asia refining margins. The tightening of US sanctions on Russian oil in January led to a tighter supply of Middle Eastern crude, it noted.
However, the brokerage expects RIL to continue outperforming industry margins, driven by a significant cost curve advantage versus naphtha-based peers driven by low US ethane gas prices.
Telecom busniess
Goldman Sachs expects Jio Infocomm to report ₹30,500 crore in revenue for the fourth quarter of the financial year 2025, up 4 per cent quarter-on-quarter (QoQ) and 18 per cent year-on-year (YoY).
Wireless revenue is estimated to grow 15 per cent year-on-year and 3 per cent quarter-on-quarter. “Jio’s subscriber base rose by 3.3 million in the third quarter of the financial year 2025, and we anticipate faster growth across wireless and fixed segments, driven by lower churn after tariff hikes and strong Fixed Wireless Access demand.”
Analysts at the brokerage firm forecast 9 million new subscribers in the fourth quarter. Average Revenue Per User (ARPU) is expected to rise to ₹209 in March 2025 from ₹203 in December 2024. Jio’s revenue growth in the fourth quarter should be about 200 basis points faster than Bharti Airtel.
Retail Business
According to Goldman Sachs, Reliance Retail’s sales growth (excluding connectivity) for the fourth quarter of the financial year 2025 is expected to be 6.5 per cent year-on-year, continuing its sequential improvement from negative 8.5 per cent in the second quarter to 5.7 per cent in the third quarter. However, fourth-quarter sales growth may see a slight impact across all companies due to one fewer day compared to the previous year.
The improving trend for Reliance Retail is driven by two key factors: the restructuring of the grocery business, including business-to-business rationalization and the closure of low-profitability stores, and a stronger focus in the fashion segment on trendier designs and enhanced value, highlighted by the launch of new fast-fashion formats such as Yousta.
RIL share price: Reliance Industries stock rose as much as 0.24 per cent during the day to ₹1,255.5 per share. The stock later pared gains to trade 0.18 per cent lower at ₹1,250.4 apiece, compared to a 0.44 per cent advance in Nifty 50 as of 11:57 AM. Shares of the company extended fall to their third day on Wednesday. The stock has risen 2.8 per cent this year, compared to a 1.6 per cent fall in the benchmark Nifty 50.
Top-notch SEBI registered research analyst
Best SEBI registered Intraday tips provider
Telegram | Facebook | Instagram
Call: +91 9624421555 / +91 9624461555