Reliance Q2 earnings: Investors have been patient, will Mukesh Ambani reward them?

Reliance, India’s most valuable company, is set to report its financial results for the second quarter of fiscal 2026 on Friday.

Its consolidated profit and EBITDA growth has been muted for the past eight quarters, logging several sequential declines in this period. The company's net profit grew from ₹16,011 crore in the first quarter of FY24 to ₹26,994 crore in the first quarter of this fiscal. But a substantial bump-up ₹8,924 crore in Q1 of FY26 came from the sale of its stake in Asian Paints, Bloomberg data shows. Barring this one-time gain, its profit grew at a compounded annual rate of 6%. In this period, EBITDA grew at a CAGR of 6%, too.

Now, with the 5G-related capex in telecom over, restructuring in retail completed with shuttering of unprofitable locations, and margins in the petroleum business bottoming out, investors will be eyeing better earnings growth.

There are some tailwinds that will help Reliance. Namely, a sharp uptick in so-called diesel cracks in September, a steady increase in the subscriber base at Jio, and an increase in the average revenue that the company makes from every Jio subscriber and each retail store.

Diesel crack is the spread between the cost of crude oil and the price of diesel, which gives an indication of how profitable refining is.

There are some headwinds, too: an expected decline in cheap Russian crude purchase and volatility in US tariffs.

What investors also look forward to are material updates in the company’s growth drivers for the next decade - its fast-moving consumer goods (FMCG) business and its green energy giga-complex at Jamnagar, which will make everything from solar panels to renewable electricity, and then use this power to generate green hydrogen and run data centres. Beyond the snazzy headlines, investors would want to know where these projects stand and a clear timeline on when they will become operational and start contributing to earnings.

“Reliance hasn’t really rewarded the investors and it’s time they do that," said Sudip Bandyopadhyay, group chairman at financial services firm Inditrade Capital Ltd.

Here are the top factors to look out for from Reliance Industries’ Q2 earnings on Friday:

Gross refining margins

Reliance’s O2C business, which refines crude oil into fuel and other chemicals, has been its key earnings driver until its telecom and retail business started meaningfully contributing to the consolidated EBITDA over the past few years. Now the telecom and retail business account for just over half of the consolidated EBITDA.

However, the gross refining margins of the O2C business still remain a key metric as for the past few quarters, weak O2C margins offset the growth in telecom and retail. Gross refining margins (GRM) in the business had swollen to a high of around 18% in 2022, during the thick of the Covid-19 pandemic. They have since fallen sharply, hitting a low of under 2% in January this year, as per analysis by JP Morgan. The GRM rose to about 10% in September, as per the brokerage, which bodes well for the company's Q2 earnings.

The rise in GRM was on the back of an uptick in diesel cracks from about $16 per barrel in August to about $20 per barrel in September, as per JP Morgan. This September GRM will offset a fall in August, bringing the average margins for the quarter in line with the preceding three months. Every $1 per barrel increase in GRM translates to a 2% increase in the company's consolidated EBITDA and 4% increase in the net profit of Reliance Industries, estimate JP Morgan analysts.

An outlook on Russian oil purchase will also be crucial. “With rising recent worries, we believe that Indian refiners will replace Russian crude with more expensive crudes. This could lead to a rise in both oil prices and premiums over benchmarks," analysts at Kotak Institutional Equities noted on 24 August.

Jio ARPU, listing updates

Reliance Jio is expected to add about 5 million subscribers during the July-September quarter, which will take the company past 500 million subscribers. The average revenue per user (ARPU), a key metric for the telecom sector, is also expected to grow by 1.5% sequentially to ₹212 per month, as per analysts at Centrum, a brokerage firm.

With the bulk of the capex for the 5G rollout completed last fiscal, the rise in ARPU and subscribers, and an extra day compared to the preceding quarter, the telecom arm of Reliance Industries is expected to grow 2.5% sequentially, as per analysts at JM Financial, another brokerage firm.

“On the telecom side, we expect the street to be sensitive to updates on ARPU growth and guidance on expected tariff hikes," said Nirav Karkera, Head of Research at Fisdom, a wealth management platform.

Investors would also want to have more updates to the company’s plan to list Jio Platforms, which houses the telecom business, after the announcement was made on 29 August during the company’s annual general meeting. At the AGM, the company said that Jio would expand into Africa before its IPO next year.

“Any update on the Jio listing would be number one on investors’ agenda," Inditrad Capital’s Bandyopadhyay said.

Outlook on FMCG expansion

Reliance said its FMCG business surpassed ₹11,000 crore in revenues in FY25 and pitched it as a growth leader for the next decade at its AGM in August. The company is targeting ₹1 trillion in revenues from the segment and has planned an investment of ₹40,000 crore over the coming three years to develop integrated food manufacturing facilities across India.

“Announcements on the FMCG business will also be crucial. They said that it has reached the size of Dabur already," Bandyopadhyay said. FMCG major Dabur had revenues of ₹12,563 crore in FY25.

The margins of the wider retail business will also be crucial to overall EBITDA growth. “For retail, while the expectation is near-term positive on the back of improving margins along with store expansion and higher penetration, guidance on growth expectations for the festive season and roadmap for further improvement in margins will be looked at closely," Karkera said.

New energy roadmap

Reliance’s biggest bet for the next decade is its clean energy giga complex at Jamnagar. Construction is progressing at break-neck speed at the Dhirubhai Ambani Giga Energy Complex at Jamnagar, the company said at its AGM.

However, the project is running behind earlier mentioned timelines. The start of a planned battery cell manufacturing facility at the site, for instance, has been rescheduled to 2026, marking a further delay from the already postponed 2025 commencement date.

Meanwhile, although the upcoming 10-gigawatt-a-year solar cell plant has successfully assembled 200 megawatts of modules, the official launch of full-scale cell production remains an unspecified number of quarters away. This distinction is critical, as solar cells, which are significantly more complex and intricate to manufacture, are the foundational components used in the assembly of modules.

“O2C is in a sweet spot, but further developments on the energy transition side of business, especially guidance on execution and monetisation roadmap is expected," Karkera of Fisdom said. “Such roadmap clarity on data centre and AI endeavours on the digital side is an incremental segment that investors can be expected to look out for."