Reliance's refining margins recover but retail remains uncertain

27 Nov 2024 CW Team

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.

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

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.

Infrastructure Urban

06 Jul 2026

ABS Marine Sees CRISIL Credit Rating Upgrade

ABS Marine Services has secured an upgrade to its long term and short term credit ratings from CRISIL, reflecting improved profitability and revenue growth through long term contracts. CRISIL moved the long term rating from BBB+/Stable to A-/Stable and revised the short term rating from A2 to A2+. The action signals strengthened financial metrics and operational resilience. The company benefited from durable client relationships with firms such as ONGC and Schlumberger. The rating decision followed stronger cash flows and an enlarged bank loan facility, which increased from Rs 3,705 million (m..

Infrastructure Transport

06 Jul 2026

Project BRAHMANK Marks 16 Years Of Strategic Roads In Arunachal

Project BRAHMANK is marking 16 years of work to establish strategic road and bridge links across Arunachal Pradesh, maintaining and developing 811 kilometres of roads and nearly 86 bridges that range from small culverts to large steel and arch bridges. These transport links are described as critical for ensuring year-round movement of defence personnel, equipment and essential supplies while improving everyday travel for people in remote villages. The project balances national security requirements with regional development by focusing on reliable access in challenging terrain. Notable enginee..

Infrastructure Transport

06 Jul 2026

Longleng CSOs Give One Week Ultimatum Over Two-Lane Highway

Civil society organisations (CSOs) in Longleng district have demanded immediate restoration of the deteriorating Changtongya–Longleng two-lane road and sought a detailed status report on the stalled construction within one week. The demand followed a consultative meeting convened under the Phom Peoples' Council (PPC) to discuss welfare and development concerns. PPC president YB Angam Phom said prolonged non-maintenance had caused hardship to commuters and affected transportation, local commerce and the district's development. The meeting urged authorities to undertake immediate restoration a..