India’s largest conglomerate, Reliance Industries, is navigating geopolitical pressures in its energy businesses, but analysts say its most significant challenge lies closer to home, a slowdown in its vast retail operations that is reshaping earnings expectations and investor sentiment.
While U.S. sanctions have disrupted some crude oil supply routes and geopolitical uncertainty has clouded parts of Reliance’s new energy ambitions, brokerages are increasingly focused on the performance of Reliance Retail, the group’s third-largest vertical by value.
Retail slowdown weighs on outlook
Reliance Retail reported year-on-year revenue growth of 8.1% in the latest quarter, while earnings before interest, taxes, depreciation and amortisation (EBITDA) rose just 2%. The modest performance has prompted several brokerages to trim earnings estimates and cut target prices on Reliance Industries’ shares, even as most maintain a “buy” rating.
At its annual general meeting last year, Isha Ambani, who leads the retail business, told shareholders the company remained confident of delivering over 20% compound annual growth in retail revenues over the next three years. Recent results, however, have raised questions about the pace of that growth.
Macquarie Capital removed Reliance from its Asia Marquee list this week, citing the retail arm as a “key swing factor” in the group’s sum-of-the-parts valuation due to slowing momentum.
Citi cut its target price to 1,815 rupees per share from 1,860 rupees, while UBS lowered its target to 1,790 rupees from 1,820 rupees, noting that retail growth in the December quarter fell short of expectations.
Consumption recovery uneven
Government efforts to stimulate demand have delivered mixed results. A reduction in goods and services tax rates ahead of the festive season boosted sales of gold and automobiles in the December quarter, but demand for fashion and consumer staples remained subdued.
Bernstein said it sees no near-term catalyst for a sharp recovery in consumption and expects only a gradual improvement through 2026. Peers such as Avenue Supermarts and Tata Group’s Trent have also reported slower growth, reinforcing concerns about a broader retail slowdown.
Reliance has argued that year-on-year comparisons are distorted by the demerger of its consumer staples business, which now operates as a direct subsidiary. The staples unit generated 50.65 billion rupees in gross revenue during the quarter, about 5% of total retail revenue.
Despite this, Citi said the latest numbers suggest more than a temporary dip, trimming its consolidated EBITDA forecasts for financial years 2026 to 2028 by up to 2% due to moderation in retail growth.
Since the earnings announcement, Reliance Industries’ shares have fallen nearly 5%.
Energy business weathers geopolitical strain
In contrast, Reliance’s core oil-to-chemicals business has shown resilience. The company reduced imports of discounted Russian crude following U.S. sanctions on firms including Rosneft and Lukoil, one of which had a long-term supply agreement with Reliance.
Russian oil had once accounted for as much as 45% of Reliance’s crude mix, according to Rystad Energy. Even so, EBITDA from the oil-to-chemicals segment rose 15% year on year, with stronger refining margins offsetting lower Russian crude intake, higher freight costs and weakness in petrochemicals, Goldman Sachs said.
New energy and telecom offer balance
Geopolitical tensions have also cast a shadow over Reliance’s new energy plans after reports suggested delays to a proposed 40-gigawatt battery storage plant due to technology sourcing challenges from China. The company has denied any slowdown, saying the project is progressing and commissioning will take place over the coming quarters.
Meanwhile, Reliance’s telecom arm Reliance Jio continues to provide stability. The business posted 12.7% revenue growth and a 16.4% rise in EBITDA, adding 8.9 million subscribers during the quarter to reach a total base of 515 million. The unit is expected to list later this year.
For investors, the contrast is becoming clear: while Reliance has shown it can manage global shocks, its ability to reignite growth in domestic consumption, particularly in retail, may prove decisive in shaping its performance in 2026.
