Reliance Industries (RELI.BO) 1QFY27: Energy inline, retail margin declines as JioMart investment steps up

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Reliance Industries (RELI.BO) 1QFY27: Energy inline, retail margin declines as JioMart investment steps up

Goldman Sachs Reliance Industries (RELI.BO)

fuel marketing under-recoveries, refined product windfall taxes and high LPG output

continued to weigh on margins even as benchmark Singapore complex GRMs more

than doubled QoQ. This quarter also saw lower throughput due to planned

turnaround of the CDU and coker unit. That said, company mitigated the downside

to refining earnings through flexible sourcing of crude from Russia/LatAm and

re-routing products to deficit markets (eg. Singapore, Australia, and East/South

Africa).

n We expect refining EBITDA to grow sequentially in 2Q as the refining market remains

tight (product inventories currently at historical lows), especially with the recently

renewed tensions in the Middle East and the Russia diesel export ban on the back of

large-scale Ukrainian drone strikes on its refining infrastructure. Amid surging

Russian crude exports, we see potential for RIL to further increase intake of

discounted Russian crude, supporting the segment’s cost base relative to less

complex refining peers. Beyond 2Q, we expect strong refining margins to sustain

over the medium term even in a scenario of a near-term global refinery runs

normalization. The low starting point limits product inventory levels heading into

CY27, while products restocking could be constrained by the limited global refining

capacity, keeping the products market tight.

n Petchem earnings likely grew QoQ, with stronger naphtha cracking margins as

product prices (especially olefins) surpassed the naphtha price rally, coupled with

stronger gas cracking margins as US ethane gas price further softened during the

quarter (accounts for one-third of feed).