For RIL, 2025-26 is the Year Energy Stopped Being the Dominant Business

Reliance Industries just announced the financials of the world’s most dislocated energy quarter since the 1970s. As crude flow through the Strait of Hormuz fell 80% in a month, Dubai marker crude touched $168 a barrel, refining margins on diesel, the difference between crude bought and fuel sold, ran 148% above last year and aviation fuel margins ran 175% above last year.

By the old logic, the January-March quarter should have brought a windfall.

But group EBITDA was flat. Oil-to-chemicals EBITDA fell 3.7% year-on-year to ₹145.2 billion. Oil and gas EBITDA fell 18.1%. Headline margins did not flow through because crude is bought in the physical market, where premiums, freight and insurance surged. Throughput fell from 20.3 to 19.5 million tonnes as Persian Gulf cargoes had to be replaced. The government reintroduced the Special Additional Excise Duty on petroleum exports, disincentivising overseas sales of diesel and aviation fuel. Domestic fuel sales went into “substantial under-recovery” as price protection kicked in. Propane and butane were diverted to LPG cylinders rather than feed the cracker. Gas from the KG-D6 deepwater block was redirected to priority sectors at a price ceiling of $8.9 a unit, against a spot price of $20.

The financials scorecard somehow managed to stay in line — April-March revenue ₹11,750 billion, up 9.8%. EBITDA ₹2,070 billion, up 13.4%. Profit ₹957.5 billion, up 17.8%, helped by ₹89.2 billion from sales of listed investments.

But the composition behind those aggregate numbers has changed.

Five years ago, an energy drag of this scale would have moved the group number by double digits. It moved it by zero. That’s because consumer-business EBITDA grew 14%, absorbing the energy decline.

Jio Platforms, the holding company for Reliance’s telecom, broadband and digital services, is now the single largest profit pool. Revenue for 2025-26 was ₹1,468.9 billion, up 14.6% and EBITDA was ₹762.6 billion, up 18.8%, with margins at 51.9%. Jio’s EBITDA exceeds O2C’s ₹605.5 billion by ₹150 billion. Subscribers crossed 524 million; average revenue per user reached ₹214 a month.

This is no longer the second business, but the first.

Retail’s 2025-26 EBITDA at ₹270.3 billion is steady but not yet earning its multiple, with margins down 30 basis points to 8.3%. Reliance Consumer Products doubled gross revenue to ₹220 billion, with the Campa Cola brand at ₹47 billion and Independence staples at ₹26 billion. The Goodness Group and Manna acquisitions extend it beyond India.

Three issues matter from here.

First, whether the shock is one quarter or structural. New LNG capacity in Qatar and the UAE will take time to come online; persistent volatility keeps O2C margins compressed regardless of headlines.

Second, capital. Net debt rose to ₹1,247.2 billion. Capex of ₹1,442.7 billion was the highest in five years. New Energy is the consumer: 20 GWp of solar manufacturing, 100 GWh of battery cells, a 150 GWp+ generation project at Kutch, and a $3 billion green ammonia supply agreement with Samsung C&T from 2029. Returns begin in 2027.

Third, consumer elasticity. Jio’s 2026-27 ARPU trajectory and fibre additions will reveal whether the engine can keep absorbing volatility unaided.

None of this makes Reliance a smaller oil and gas company. O2C 2025-26 revenue at ₹6,620 billion is up 5.7%. Jamnagar remains among the most complex refineries on the planet.

But 2025-26 settles the relative question. Reliance is still an energy major. It is no longer principally an energy company. Energy contributed under 45% of group EBITDA; consumer crossed 55%. With consumer growing 14-18% and energy under structural pressure, the gap is set to widen in 2026-27.

That distinction drives the multiple. The stock barely moved, holding in its ₹1,300-1,400 band. The market is reading consumer durability through the energy weakness, but it has not re-rated. The read should now begin with Jio ARPU, retail margin and consumer scale-up, with energy as the variable that buffers or amplifies. The question is no longer whether Reliance will re-rate but what it should re-rate as.

(This column reflects the author's personal views and is based on publicly available information. It is intended for general commentary and analytical purposes only and should not be construed as investment advice.)