According to an average estimate of seven brokerages, RIL’s consolidated revenue is expected to grow about 8% year-on-year in Q3, while profit after tax is seen rising around 7% from a year earlier. Consolidated EBITDA is projected to grow close to 9% year-on-year, with a modest sequential improvement.
Oil-to-Chemicals (O2C)
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.Kotak Equities expects O2C EBITDA to rise around 15% YoY and 10% quarter-on-quarter, supported by improved refining margins. Nuvama estimates a 13% YoY jump in O2C EBITDA, led by a sharp 21% increase in Singapore GRMs, driven by strong petrol and diesel spreads. Emkay is even more optimistic on the sequential front, forecasting an 11% quarter-on-quarter rise in O2C EBITDA to about Rs 16,600 crore.
YES Securities, however, expects refining throughput to decline marginally by 0.6% YoY and 1.7% sequentially to 17.8 million metric tonnes, while GRMs are estimated at $13.6 per barrel. JM Financial also sees O2C EBITDA rising quarter-on-quarter by 8.5%, with implied GRMs improving to around $11 per barrel compared with $9.5 per barrel in the September quarter.
Jio
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 16.5% YoY, though sequential growth is likely to be modest at about 2.7%, supported by slightly higher ARPU and subscriber base. Nuvama estimates Jio EBITDA to rise 16% YoY and 2% quarter-on-quarter, driven by a 5% year-on-year increase in ARPU and healthy subscriber additions.
YES Securities pegs Jio ARPU at Rs 213.2 for the quarter, with subscriber base expected to reach 512.4 million. JM Financial expects ARPU to inch up 0.4% sequentially to around Rs 212, supported by tariff upgrades, while subscriber additions are seen at a robust 8.3 million. Emkay expects ARPU to rise about 1% quarter-on-quarter, with net subscriber additions of around 5.5 million during the quarter.
Retail
Retail is expected to remain the soft spot in RIL’s portfolio, with growth impacted by higher competitive intensity and investments in quick-commerce.
Kotak Equities expects retail EBITDA to grow just 4.5% YoY, while JM Financial sees EBITDA growth of around 3.8% YoY, noting that profitability could remain under pressure due to the ramp-up in quick-commerce initiatives. Nuvama expects retail EBITDA to increase 3% YoY, aided partly by a preponed festive season.
YES Securities estimates retail revenue to grow 8.1% YoY and 7.9% sequentially to about Rs 97,700 crore, with EBITDA margin at around 7.59%. Emkay expects retail EBITDA to rise 3% sequentially to about Rs 7,030 crore.
Oil and Gas (E&P)
The upstream oil and gas business is expected to continue facing headwinds due to lower production and softer realizations. Kotak Equities expects E&P EBITDA to decline around 15% year-on-year and about 5% sequentially, driven by lower volumes and realizations.
Nuvama similarly estimates a 13% year-on-year decline in O&G EBITDA on an 8% fall in production. Emkay expects upstream EBITDA to decline 4% sequentially to around Rs 4,810 crore, while JM Financial expects a 3% quarter-on-quarter decline due to the natural decline in gas output.
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Overall, 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.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)