Reliance Q1FY26: Stellar Profit Growth Led by Jio and Digital, O2C Margins Hold Steady

India’s largest IT services company, Tata Consultancy Services (TCS), kicked off the Q1FY26 earnings season with a familiar tone - cautious optimism. While top-line growth remained muted, profit margins and strategic insights suggest that TCS is better placed than many peers to weather current headwinds. The stellar performance in its digital and retail segments has allowed Reliance to weather challenges in its traditional O2C (Oil to Chemicals) business, making Q1FY26 a strong quarter despite headwinds.

Reliance’s Big Picture for Q1FY26

Reliance Industries reported a 78% YoY growth in net profits for Q1FY26, posting ₹26,994 crore in net profit. This was a significant positive surprise, especially considering that much of this growth was driven by non-core activities. A notable contributor to this surge was the sale of Asian Paints shares, from which Reliance booked a net gain of ₹8,900 crore. Excluding this one-time income, the net profit still grew by 20%, signaling healthy operational performance.

The company’s ability to double its sales every 4 years is a testament to its growth trajectory. While the top-line revenue of ₹63,437 crore grew by only 1.3% YoY, the profit margins saw substantial improvement, reflecting the company’s continued cost efficiency and strategic investments.

O2C Business Performance: A Mixed Bag

The O2C (Oil to Chemicals) segment reported a 1.5% YoY decline in revenues, primarily driven by lower crude oil prices and a planned shutdown of refineries, which impacted volumes. Despite these challenges, the O2C business managed to achieve a 10.8% YoY growth in EBITDA, thanks to favorable margins in the domestic fuels sector.

The downstream chemicals business also performed relatively well, driven by strong transportation fuel cracks and improved margins in PVC and PP. However, this was partially offset by lower volumes in certain product categories, particularly polyester margins.

In sum, while the O2C segment didn’t contribute as much to top-line growth as expected, its margin expansion and EBITDA growth provided positive surprises, making it a resilient part of the overall Reliance performance.

Retail Business Gains Momentum

The Retail segment was one of the standout performers in Q1FY26, with revenues contributing ₹84,172 crore, accounting for nearly one-third of the total sales. While revenues were slightly lower than street estimates, the 11.3% YoY growth in retail sales amidst weak urban demand was a remarkable achievement.

One of the most exciting developments in the retail business is the expansion of the FMCG (Fast-Moving Consumer Goods) segment, which has already achieved sales of ₹11,500 crore. Reliance aims to grow this to ₹25,000 crore in the next two years, positioning itself among the top FMCG players in India. Not only is Reliance tapping into organic growth, but it’s also bolstering its portfolio with nostalgic brands like Campa Cola, Ravalgaon Sweets, and Kelvinator.

Reliance’s growing FMCG business is undoubtedly set to be a key driver of its future growth, contributing significantly to the top line in the years to come.

Jio’s Contribution to the Profit Surge

The Jio Digital segment continues to shine, and it was the real profit driver for the quarter. Jio reported a 23.2% YoY growth in net profits, reaching ₹6,711 crore, with sales of ₹30,882 crore.

Jio’s strong performance was backed by an impressive EBITDA margin improvement of 300 basis points, reaching ₹17,301 crore.

One of the most exciting developments for Jio was its subscriber growth. The company added a record 99 lakh mobile subscribers in Q1FY26, bringing its total user base to 49.8 crore. Jio’s Average Revenue Per User (ARPU) hit a record ₹208.80, further boosting profits.

The company also saw strong growth in its 5G user base, with 21.2 crore 5G users and 2 crore fixed broadband connections. Jio Fiber, with 74 lakh fixed-wire access (FWA) subscribers, emerged as a global leader in fixed broadband access.

With 54.7 GB of data traffic per user, Jio continues to lead the market, positioning itself as a major player in India’s digital economy.

Conclusion: Reliance’s Diversification Proves Strong in Q1FY26

Reliance Industries’ Q1FY26 performance highlights the company’s strategic shift toward new-age businesses like digital services and retail, with a notable contribution from Jio Digital and FMCG. The company’s traditional O2C business faced some headwinds, but its resilience in digital and retail segments ensured overall growth.

While top-line growth remains subdued, profit growth continues to impress, underscoring the effectiveness of Reliance’s diversified business model. The company’s ongoing focus on cost control, margin expansion, and strategic investments has positioned it well for long-term growth.

The company’s ongoing focus on cost control, margin expansion, and strategic investments has positioned it well for long-term growth. For investors, Reliance’s diversified portfolio remains a solid bet, with strong prospects in digital, retail, and FMCG. As the 5G rollout continues and FMCG expands, Reliance is poised to capture a significant share of India’s growing consumption market.

Disclaimer: The information provided in this article is for general informational purposes only. It does not constitute investment, financial, or other professional advice. Reliance Industries and other company names mentioned are referenced purely for analysis purposes based on publicly available data. Readers are advised to conduct their own research or consult qualified professionals before making any investment decisions.