Reliance stock outlook improves after Q2 beat despite target cuts

Reliance Industries delivered a strong September quarter, prompting brokerages to raise earnings expectations while tempering some price targets. The company reported Q2 FY27 gross revenue of INR 3.62 trillion, up 27.8 percent year on year, and profit after tax of INR 29,250 crore, up 32 percent, according to Business Standard.

O2C and Jio drive estimates higher

Reliance's oil-to-chemicals division benefited from stronger refining profitability, higher fuel cracks and improved downstream spreads. The performance exceeded operating expectations and led Jefferies to increase its FY27 and FY28 EBITDA estimates by 6 percent and 2 percent, respectively.

Jio also beat expectations as higher average revenue per user and wider margins supported earnings. The digital services business therefore remains a key contributor to the group's growth profile, while upstream operations were broadly stable in the quarter.

Retail remains the main constraint

Reliance Retail was the weaker part of the quarter. Revenue rose only 1 percent year on year, while EBITDA declined 10 percent as the festive calendar shifted toward the December quarter and the company absorbed input-cost inflation. Emkay Global expects Jio to maintain its trajectory and Retail to recover as seasonal demand improves.

Brokerage views nevertheless remain divided. Dolat Capital raised its FY27 profit estimate by 6.2 percent and retained a target of INR 1,635 per share, down from INR 1,670. Emkay lowered its September 2027 target by about 8 percent to INR 1,550, citing weaker Retail, macro volatility and a lower target multiple for the group. Jefferies set a target of INR 1,710.

Investors weigh growth against volatility

The split between higher earnings forecasts and lower valuation assumptions highlights the main issue for investors: Reliance's operating momentum is improving, but the outlook remains exposed to refining margins, currency and commodity moves, competition, venture monetisation and policy risks. The next focus will be whether festive demand restores Retail profitability while O2C conditions remain supportive.

India's broader equity market also shapes the setting for large-cap Reliance shares; investors can follow the BSE Sensex for the domestic market environment.

More news and analyses on Reliance stock remain available in the company topic.