The selloff marks a dramatic reversal for a stock that outperformed the Nifty to rally 29% in 2025. But the mood has soured fast: concerns over refining dependence on Russian crude, coupled with visible weakness in discretionary spending across organized retail peers, have left bulls scrambling for answers as the company prepares to report its December quarter earnings this Friday.
Yet brokerages remain largely sanguine, framing 2026 as a “year of catalysts” for Reliance, with Q3 results expected to showcase a tale of two businesses: energy shining bright, retail stumbling through a bumpy patch.
“RIL’s upcoming quarter will see energy shine with retail bumpy,” Morgan Stanley‘s Mayank Maheshwari said. “Earnings trajectory remains robust and the path for multiple catalysts every quarter is in play. Consumer retail could drag stock performance near term.”
Morgan Stanley expects December quarter EBITDA to rise 10% year-on-year, driven by a 16% year-on-year EBITDA growth in the Oil to Chemicals (O2C) segment as the refining upcycle sustains momentum. However, profit growth is expected to be muted at just 1% year-on-year due to capitalization of interest and depreciation expenses, especially for the telecom vertical.
Goldman Sachs expects O2C EBITDA to grow 11% quarter-on-quarter and 16% year-on-year as stronger refining earnings more than offset declines in petrochemical earnings. The brokerage raised its refining estimates while trimming near-term retail growth assumptions, resulting in largely unchanged overall earnings.
Axis Capital’s Gaurav Malhotra projects consolidated EBITDA of ₹467 billion, up 2% quarter-on-quarter and 7% year-on-year, with O2C EBITDA rising on better refining margins partially offset by weaker petrochemicals.
Retail Growth Hits Speed Bump
The retail segment, which has been a key growth driver, is now facing headwinds. Goldman Sachs lowered its sales growth expectation for Reliance Retail to around 10% year-on-year in the December quarter, down from an earlier estimate of 12% and significantly below the 21.3% growth posted in the September quarter.
“In line with trends seen at the peer companies, we expect moderation in 3Q earnings growth in retail due to weak discretionary spend, base effects and festive timing,” Goldman analyst Nikhil Bhandari said in a note.
Morgan Stanley estimates 9-10% year-on-year retail topline growth, assuming a 150 basis point negative impact due to the demerger of the consumer products vertical. Axis Capital expects retail growth to decelerate due to a higher base, festive shift, GST rationalization and the demerger of RCPL (Reliance Consumer Products).
Russian Crude Concerns Overblown?
Despite the recent selloff triggered by Russian crude exposure worries, Goldman Sachs argued the fears are overblown. “We see limited impact of these factors on the company’s medium term earnings profile,” Bhandari said. “Refining fundamentals remain supported by tight product markets through CY27, while crude differentials across alternative grades (including Middle Eastern barrels) are improving, which could help sustain strong refining margins even in a scenario where Russian crude exposure were to reduce further.”
The brokerage also flagged further upside risks to refining margins in a scenario of a revival in crude sourcing from Venezuela. Morgan Stanley echoed this view, noting that “upside risks from the strong GRMs and eventually Venezuelan crude (also reflected by very strong stock performance of global refineries this week)” support their positive stance.
2026: A Year of Catalysts
Despite near-term headwinds, brokerages are positioning 2026 as a pivotal year for Reliance, with multiple triggers expected to drive stock outperformance.
“2026 is a year of catalysts for RIL stock outperformance and the path, as in every cycle, will see speed bumps,” Maheshwari said. Morgan Stanley remains overweight with a price target of ₹1,847, expecting investments over $80 billion to be monetized starting from 2026 as part of Reliance’s fourth monetization cycle.
Jefferies maintained a Buy rating with a target of ₹1,830, projecting 13% consolidated EBITDA growth in FY27 with Jio “doing the heavy lifting.” The brokerage expects Jio to deliver 22% year-on-year revenue growth in FY27, underpinned by tariff hikes in the mobile segment and continued momentum in home broadband. Margin expansion of 280 basis points is set to fuel 28% year-on-year EBITDA growth, while Jio is likely to deliver 65% year-on-year growth in free cash flow.
“In 2026, investor focus will pivot to JPL’s imminent listing, the timing and magnitude of further tariff hikes, and the scale-up of its FWA offering,” Jefferies said, flagging a tariff hike and Jio’s listing by mid-2026 as key catalysts.
Other triggers include restoration of mid-teens growth in retail in FY27, and value discovery in FMCG, new energy, and the data center business over FY27-28.
Valuation Support Emerges
The recent correction has also created a valuation cushion. Axis Capital noted that Reliance trades at 10.7x one-year forward EV/EBITDA, at around 11% discount to its past five-year average, maintaining a Buy rating.
Morgan Stanley expects a 12% earnings CAGR over FY25-28, largely driven by a tight refining cycle, global involution in chemicals, ramp-up in new energy, and monetization of retail and digital investments.
“We believe steady telecom and energy performance, alongside low-teens retail growth, remains sufficient to support mid-teens consolidated EBITDA growth trajectory through FY26-28E,” Goldman Sachs said.
The verdict from brokerages: while near-term volatility around retail weakness and crude sourcing concerns may persist, the constellation of catalysts, from Jio’s much-awaited IPO and tariff hikes to refining upcycle benefits and new energy ramp-up, suggests the selloff may be creating an entry point for patient investors willing to look past the noise.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)