Reliance's 40% Profit Jump:
A Turnaround, or a Cyclical
Spike?
Nov 09, 2026
8 min read
Indian Markets
Executive Summary
A 40% Profit Jump, But Not Broad-Based Growth
Reliance's net profit rose 40.6%, but refining contributed roughly 85% of the increase in operating profit. Excluding oil-to-chemicals, underlying EBITDA grew just 5.2%.
Refining Windfall Drives the Earnings Spike
West Asian supply disruptions pushed fuel margins to historic highs, boosting Reliance's refining profits. However, normalising margins and windfall taxes could limit sustainability.
Jio Provides the Structural Growth Story
Jio's high-teen earnings growth and recent listing strengthen Reliance's long-term investment case, while Retail remains under pressure with declining profitability.
Value the Core, Not the Temporary
Spike
Reliance's 11.6% stock rally reflects a reassessment of its underlying value rather than a complete turnaround. Investors should favour sustainable digital growth over extrapolating exceptional refining profits.
Indicator
Reading
Read-through
Net profit to shareholders, Q2 FY27
₹25,548 crore (+40.6% YoY)
Record; ₹4,180 crore above the Bloomberg poll
Reported PAT, Q2 FY27
₹29,550 crore (+33.8% YoY)
Outside shareholders' share barely moved: ₹4,002 crore vs ₹3,927 crore
O2C EBITDA
₹25,203 crore (+67.9% YoY)
About 85% of the group's ₹12,042 crore EBITDA gain
Singapore gasoil (diesel) crack
US$65.8/bbl vs US$18.7
3.5 times a year ago; a war-tight diesel market
Brent: Q2 FY27 average; 2 Nov
~US$97/bbl (+40.6% YoY); US$104.77
Down 7.6% on 2 Nov on Iran diplomacy
Digital Services EBITDA
₹22,223 crore (+17.7% YoY)
The structural engine; listed Jio worth ₹13.18 lakh crore on 2 Nov
Retail EBITDA (before one-off)
₹6,228 crore (−8.6% YoY)
The weak link; a net 222 stores closed in the quarter
Group EBITDA excluding O2C
+5.2% YoY
The underlying growth rate, on our calculation
Diesel export levy (31 Oct)
₹11.50/litre, from ₹8.50
The state is sharing the windfall, reviewed fortnightly
RIL share price (2 Nov)
₹1,300 (+11.6%)
Best day since April 2020; still down more than 17% in 2026
Source: Ametra Research
01
Where Did the Additional Profit Come From?
Oil-to-chemicals contributed approximately 85% of Reliance's ₹12,042 crore increase in group EBITDA. Digital Services added to earnings, while Retail, Oil & Gas and other businesses recorded declines.
“
The 40% Headline Doesn't Tell the Whole Story
The sharp rise in shareholder profits reflects the exceptional performance of Reliance's wholly owned refining business. Excluding oil-to-chemicals, group EBITDA grew just 5.2%, highlighting the gap between a temporary earnings surge and the underlying growth rate of the broader business.
02
Fuel Margins More Than Tripled
Diesel refining margins rose from US$18.7 to US$65.8 per barrel year-on-year, while jet-fuel margins increased from US$16.1 to US$59.3. Supply disruptions across the Gulf and Russia tightened refined-product markets.
● Q2 FY26 (Jul - Sep 2025)
● Q1 FY27 (Apr - Jun 2026)
● Q2 FY27 (Jul - Sep 2026)
What Drove the Windfall?
Global Supply Disruptions
Reliance's Refining Flexibility
“
This Was a Price Story, Not a Volume Story
Reliance demonstrated strong execution by navigating disrupted supply chains and capturing exceptional fuel margins. However, the profit surge was largely enabled by geopolitical conditions rather than a structural increase in refining demand. The sustainability of these earnings will depend on how long supply disruptions and elevated fuel margins persist.
03
Reliance experienced a similar profit surge during the 2022 energy crisis, only for earnings growth to flatten in the following quarter. The comparison raises an important question: could today's exceptional refining profits face a similar reversal?
● Quarter year earlier
● Quarter
What's Different This Time?
2022: The Windfall Was Cut Short
Unlike 2022, export levies were already in place throughout Q2 FY27, yet Reliance still reported record profits. Its SEZ refinery also benefits from exemptions, making refining-margin normalisation a more important risk than taxation alone.
“
The Windfall May Last Longer, but It Isn't Permanent
The 2022 experience highlights how quickly extraordinary refining profits can normalise. While Reliance's current earnings have remained strong despite existing export levies, their sustainability depends primarily on how long exceptional global fuel margins persist.
04
The Structural Floor –Jio, Now With a Price Tag
Jio's Listing Makes Its Value Visible
Jio listed on 28 October 2026 at an issue price of ₹1,119 and closed its first trading day at ₹1,417.50, a 26.7% premium. Of the funds raised, ₹27,500 crore was used to repay foreign borrowings, strengthening its balance sheet.
“
Refining Drives the Windfall. Jio Provides the Compounding.
Jio's steady earnings growth, expanding subscriber base and newly visible market valuation provide a more durable foundation for Reliance's long-term value than temporary refining profits.
05
Reliance's refining business continues to benefit from unusually strong global fuel margins, but weaker profitability in Retail and other segments raises questions about how broad-based the group's earnings recovery really is.
+40.6%
Net Profit to Shareholders
Q2 FY27 · YoY
+23.9%
Group EBITDA Growth
Q2 FY27 · YoY
+5.2%
EBITDA Growth Excluding O2C
Underlying non-refining businesses
+67.9%
O2C EBITDA Growth
Year-on-year
+10.9%
Operating Margin
Up from 9.3%
20.6 MT
Refining Throughput
Down from 20.8 MT
+16.6%
EBITDA Growth
542.4M
Subscribers
₹218.8
Monthly ARPU
The Contrasting Forces Within Reliance
The Bull Case: Refining
+67.9%
O2C EBITDA growth · YoY
Tight global fuel supplies and elevated refining margins could sustain exceptional profitability for longer than a single quarter.
The Weak Link: Retail
-8.6%
Retail EBITDA growth · YoY
Despite 6.4% revenue growth, Retail's profitability declined amid digital-commerce investments, input-cost pressures and softer operating performance.
The Difference Between Headline and Underlying Growth
While O2C EBITDA surged 67.9%, Digital Services grew 17.7% and Retail contracted 8.6%. Excluding refining, Reliance's group EBITDA increased only 5.2%, highlighting the uneven performance across its businesses.
What Investors Should Watch Next
Retail's Festive Quarter: Reliance attributes part of the weakness to festive demand shifting into Q3 and investment in digital commerce. The October–December quarter will test whether those investments translate into improving profitability.
“
A Strong Refining Cycle Doesn't Yet Mean a Group-Wide Turnaround
Elevated refining margins may persist while global supply remains constrained, but the group's underlying performance is considerably more modest. Retail's declining profitability remains a concern, and a credible turnaround will require evidence of earnings improvement beyond the oil-to-chemicals business.
06
Reliance recorded its biggest single-day rally since April 2020, even as crude oil prices fell sharply. This divergence raises an important question: were investors buying the refining windfall or reassessing the value of Reliance's underlying businesses?
Reliance Shares
BRENT CRUDE
What Explains the Rally?
Analysts Remain Positive, but Cautious
While 30 of 31 analysts maintained Buy ratings, several reduced price targets or future earnings estimates, signalling expectations of moderating refining margins.
Jio's Valuation Provides a Visible Floor
Following its listing, Jio's market capitalisation reached approximately ₹13.18 lakh crore, making the value of Reliance's digital business more transparent to investors.
The Margin of Safety Has Narrowed
The sharp one-day re-rating has already recovered part of the stock's earlier decline, reducing the valuation cushion available to new investors.
“
Investors Were Repricing Reliance's Structural Value, Not Just Refining Profits
The rally suggests investors were recognising the value of Reliance's underlying businesses, particularly Jio, rather than extrapolating the refining windfall. However, with analysts already anticipating margin normalisation and the stock sharply higher, much of the near-term valuation opportunity may have been realised.
07
Higher crude prices and refining margins create very different outcomes across India's energy sector. While export-oriented refiners benefit, the government captures part of the windfall through taxes, and fuel retailers face pressure from domestic pricing.
Who Benefits When Refining Margins Surge?
During the previous levy period, the government collected approximately ₹25,000 crore in the first year, illustrating how refining windfalls are shared across the economy.
The Trade-Off for Indian Investors
Higher Crude Prices
Support refining margins and Reliance's O2C earnings, but increase India's import bill and inflationary pressures
Lower Crude Prices
Ease India's import costs and inflation, but could reduce exceptional refining profits at Reliance.
“
What's Good for Reliance's Refining Business Isn't Always Good for India
Exceptional refining margins can boost Reliance's profits and influence broader index performance, but they also reflect higher energy costs for the economy. With Reliance contributing roughly half of the Nifty's gain on 2 November, investors must recognise both index concentration and the opposing effects of crude prices on corporate earnings and India's macroeconomic outlook.
08
Stance
Where
Rationale
Core hold
Reliance, for its digital and consumer franchise
Floor re-rated on 2 Nov; hold, but do not chase the rally
Favour
Digital and telecom compounding (Jio)
High-teen growth visibility, IPO-funded deleveraging
Fade
Extrapolating Q2 refining profits
~85% of the gain came from war-tight cracks that will normalise
Selective
Export-oriented refining exposure
A trade with an expiry date; the fortnightly levy shares the windfall
Add on confirmation
The Reliance Retail story
The festive October–December quarter must show EBITDA growth
Watch
Gasoil cracks, SAED resets, Hormuz, Jio discount
The tripwires that end the spike or reset the floor
“
09
Ametra’s Read
Reliance's 40% profit surge reflects a cyclical refining windfall rather than a broad-based turnaround. Nearly 85% of the incremental operating profit came from exceptionally high refining margins driven by geopolitical disruptions, while underlying EBITDA growth was approximately 5%. We believe Jio remains Reliance's strongest structural growth engine, supported by high-teen earnings growth and improved balance-sheet strength following its listing, while Retail must demonstrate a sustained recovery. The recent 11.6% stock rally has already repriced much of Reliance's underlying value, limiting the opportunity to chase further gains. Our stance is to value sustainable growth over temporary windfalls, remain cautious about extrapolating refining profits, and monitor fuel margins, windfall taxes and Retail's upcoming quarterly performance. The opportunity lies in owning the long-term compounding businesses, not paying a premium for cyclical earnings.
