Reliance profit rises, but yearly margin slips as costs outpace revenue
Sequential margins improved as revenue growth exceeded expense growth, while other income remained a material contributor to pre-tax profit.
Filed 30 Oct 2026, 21:32 IST · after market close · Reliance Industries Ltd (RELIANCE)
Key takeaways
- Consolidated net profit grew 33.76% year on year, but operating margin declined 0.89 percentage points as expenses grew faster than revenue.
- Sequential momentum improved, with revenue up 6.83% and operating margin expanding 1.78 percentage points as expenses rose 4.59%.
- Other income contributed 15.66% of profit before tax, while the 0.69-percentage-point sequential fall in the tax rate also supported profit growth.
Price around the results
Yearly profit growth came with a margin trade-off
Consolidated revenue grew 29.84% year on year, but expenses increased faster at 31.26%, which reduced operating margin by 0.89 percentage points. Operating profit therefore grew 23.39%, below revenue growth, while higher interest costs, up 24.23%, added to the pressure. Net profit still rose 33.76%, helped partly by other income equal to 15.66% of profit before tax.
Sequential operating momentum strengthened
Compared with Q1FY27, revenue increased 6.83% while expenses rose 4.59%, widening operating margin by 1.78 percentage points. The tax rate fell 0.69 percentage points, supporting the 27.39% sequential increase in net profit, although interest costs still rose 1.73%. The margin has now improved for two consecutive quarters from 15.01% in Q4FY26 to 17.13% in Q2FY27, though it remains below the 18.02% recorded a year earlier.
Margin remains above the reported Energy peer median
Reliance's 17.13% operating margin was 1.93 percentage points above the 15.2% median for 16 Energy peers that had reported the same quarter. That comparison places the company above the sector midpoint despite the year-on-year margin contraction.
Retail scale and sector pressures shape the outlook
Management said Daily Essentials, led by Independence, grew 1.7 times year on year and delivered about Rs 7,000 crore in H1FY27 sales. The company said store-business cash flows are funding digital-commerce growth and that it plans to continue expanding dark stores; management also said FY28 and FY29 are expected to convert retail scale into value. For the year-on-year margin pressure, management cited SAED levies, higher premiums, freight and insurance, and under-recovery in fuel retailing, while it said polyester demand fell 6% amid price volatility and cautious buying.
No market reaction yet after the late filing
The consolidated results were filed after market close, so there was no current trading reaction to assess. After the last eight results, the stock rose four times and fell four times, with a median absolute move of 3.04%, indicating a mixed historical response rather than a consistent direction.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,30,601 cr | ₹3,09,468 cr | +6.83% | +29.84% |
| Other income | ₹6,093 cr | ₹6,745 cr | -9.67% | +37.60% |
| Expenses | ₹2,73,985 cr | ₹2,61,951 cr | +4.59% | +31.26% |
| Operating profit | ₹56,616 cr | ₹47,517 cr | +19.15% | +23.39% |
| Operating margin (%) | 17.13% | 15.35% | — | — |
| Interest | ₹8,481 cr | ₹8,337 cr | +1.73% | +24.23% |
| Depreciation | ₹15,315 cr | ₹15,100 cr | +1.42% | +6.24% |
| Profit before tax | ₹38,913 cr | ₹30,825 cr | +26.24% | +33.86% |
| Tax | ₹9,363 cr | ₹7,629 cr | +22.73% | +34.18% |
| Net profit | ₹29,550 cr | ₹23,196 cr | +27.39% | +33.76% |
| EPS (₹) | ₹18.88 | ₹15.48 | +21.96% | +40.69% |
Operating margin of 17.13% compares with a Energy sector median of 15.20% across 16 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Daily Essentials, led by Independence, grew 1.7 times year on year and delivered about ₹7,000 crore in H1 FY27 sales.
Guidance & outlook
- FY28 and FY29 are expected to convert retail scale into value.
- The company plans to build online scale before converting it into value.
- Supply disruptions and low inventories are expected to support middle distillate cracks.
- Near-term global spot LNG prices are expected to depend on SoH flows and winter severity.
- Short-term gas prices are expected to remain elevated and volatile, with upside into 2027.
Planned next quarter
- The Q3 priority is to win the festive season, increase service and finance attachment, and expand reach.
Expansion
- The retail business plans to continue expanding dark stores.
New products
- RCPL entered the dairy category with ice creams positioned as India's first accessible premium dairy brand.
New initiatives
- Store-business cashflows are funding digital commerce growth.
Competition
- The company says it is now India's largest retailer of premium products, including mobile phones from Apple and Samsung.
Problems & risks
- Polyester demand fell 6% year on year amid price volatility and cautious buying.
- Earnings growth and margins were adversely affected by SAED levies, higher premiums, freight and insurance, and under-recovery in fuel retailing.
- Global gas and LNG markets were structurally tightened by the Middle East conflict.
What to watch
- Whether operating margin holds above 17.13% after the two-quarter improvement from 15.01%.
- Whether expenses continue to grow more slowly than revenue after the sequential gap of 4.59% versus 6.83%.
- Whether other income remains near its 15.66% share of profit before tax.