Brokerage JP Morgan reported that one of the factors behind Reliance Industries Ltd's recent underperformance—weak refining margins—has shown improvement, while the other, sluggish retail top-line growth, remains unpredictable. The company’s stock has fallen by 22% from its peak on 8 July (compared to a 3.3% decline in NIFTY), reversing its earlier strong performance this year. Despite this, in a market where many stocks trade well above historical valuations, Reliance's fair relative valuations are considered an appealing aspect. Led by billionaire Mukesh Ambani, Reliance Industries operates across three core business segments: the oil-to-chemical (O2C) unit for oil refining and petrochemicals, telecom services under Jio, and the retail division. The conglomerate also has a media unit and a new energy business. Reliance Retail and Jio Telecom collectively account for about 50% of the total consolidated EBITDA for FY24. According to JP Morgan, these segments are projected to contribute nearly all of the company's net EBITDA growth over the next three years. With an annual EBITDA run rate of USD 20 billion, the company is expected to maintain positive free cash flow for the next three years, despite significant capital expenditure plans for new energy projects, retail expansion, and petrochemical capacity increases. JP Morgan highlighted two key challenges: 1) Refining margins, which dropped sharply beginning in June, and 2) continued disappointment in revenue and EBITDA growth at Reliance Retail. The brokerage observed that refining margins have rebounded recently, improving performance in the third quarter, and suggested that the reduction in Chinese export tax rebates could further support refining margins, or cracks, which represent the difference between crude oil costs and finished product prices. As for retail, JP Morgan questioned whether growth was bottoming out but noted that near-term predictions remain challenging. It attributed the struggles to a broader slowdown in retail and internal restructuring within the company. The report also flagged investor concerns about the impact of Quick Commerce on Reliance Retail’s performance.