In a note dated January 9, Goldman Sachs said it has refreshed its estimates for Reliance by marking assumptions to evolving trends across segments. Like-for-like with peers, the brokerage expects Q3 earnings growth in retail to moderate due to weak discretionary spending, base effects and festive timing. However, this is likely to be partly offset by a strong refining-led performance in the oil-to-chemicals (O2C) business. As a result, overall earnings remain largely unchanged despite tweaks at the segment level.
Reliance Industries’ stock price has corrected about 8% in the last couple of trading sessions after outperforming the Sensex, Nifty and peers over the past year. The international brokerage attributes the recent pullback to investor concerns around Reliance’s exposure to Russian crude and softer retail growth momentum. But analysts believe these worries are overdone and see limited impact on the company’s medium-term earnings profile. Here’s what the brokerage is saying about Q3.
Refining remains the key pillar
Goldman Sachs analysts expect O2C EBITDA in Q3FY26 to rise 11% quarter-on-quarter and 16% year-on-year, driven by stronger refining earnings that more than offset a sequential decline in petrochemicals. Refining cracks improved during the quarter amid permanent refinery closures, unplanned outages and disruptions to Russian product exports, tightening global product markets. Lower Dubai–Brent spreads and easing Saudi crude premiums have also improved the cost curve positioning for complex Asian refiners such as Reliance, helping sustain strong margins even as Russian crude exposure has reduced to about 33% of the import mix in Q3 from 52% in Q2.Goldman Sachs expects refining margins to remain supported into Q4 and through CY27, given structurally tight capacity and limited net additions globally. It also flags upside risks in a scenario where Venezuelan crude sourcing revives, noting that Reliance had historically sourced up to 30% of its crude from Venezuela and is well-equipped to process heavily discounted heavy sour grades.
Petchem earnings, on the other hand, are expected to soften sequentially due to weaker olefins spreads following lower oil prices. While Goldman remains bearish on a broader petchem margin recovery due to structural overcapacity, it expects Reliance to continue outperforming peers owing to its cost advantage from ethane cracking economics.
Jio to clock healthy numbers
In telecom, Goldman expects a stable quarter with healthy subscriber additions. Jio Infocomm’s Q3FY26 revenues are pegged at Rs 32,900 crore, up 12% year-on-year, with subscriber additions of about 9.5 million during the quarter. Average revenue per user is expected to inch up 1% sequentially to Rs 214. For the full year FY26, Goldman forecasts revenue and EBITDA growth of 15% and 20% respectively for Jio Platforms, with non-connectivity businesses growing at a faster 30% clip and now accounting for around 12% of revenues.Over the medium term, Goldman expects Jio to deliver an 18% EBITDA CAGR over FY26-30, supported by continued gains in wireless and home broadband subscribers, early capex investments and a rising contribution from cloud, content and other non-connectivity services. Jio’s non-connectivity businesses already generate about $2 billion in annualised revenues and have been growing at around 30% year-on-year.
Will retail drag Q3?
The retail arm remains the near-term drag, the report added. Goldman has lowered its Q3FY26 sales growth assumption for Reliance Retail to about 10% year-on-year from an earlier 12%, citing early festive season effects and a lack of sharp recovery in discretionary demand. EBITDA growth is expected at around 6% year-on-year, with some margin pressure from investments in quick commerce and lower operating leverage. The brokerage has cut its FY26-28 retail EBITDA estimates by 4-6%, but notes that the stock is already discounting an implied retail valuation well below its bear-case estimate.
Overall, Goldman expects consolidated EBITDA to grow 6% sequentially and 11% year-on-year in Q3FY26 to about Rs 48,700 crore. For FY26-28, it believes steady energy and telecom performance, along with low-teens retail growth, is sufficient to support mid-teens consolidated EBITDA growth.
Introducing JioStar estimates
Reliance Industries has begun reporting JioStar-related data from early CY25, and we now incorporate this business into our forecasts, the brokerage says. It expects JioStar to deliver an 8% revenue CAGR and an 11% EBITDA CAGR over FY26–30E. Goldman values JioStar using a DCF methodology, assuming a 10.5% WACC and a 4% terminal growth rate, in line with its valuation approach for Jio. This yields a DCF-implied valuation of US$12 billion, translating into a value of Rs 78 per share for RIL on a 100% ownership basis. Our estimates imply JioStar is valued at 15x FY27 EV/EBITDA.
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The brokerage values the core refining and petrochemicals business at 8x FY27E EV/EBITDA, and offline retail at 33x December 2027 EV/EBITDA.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
