Reliance's Record Quarter Led by Oil-to-Chemicals Segment Impresses Bull — Market Talk

What happened

Reliance Industries reported stronger-than-expected second-quarter earnings, led by its oil-to-chemicals business. That segment's Ebitda, a profit measure, hit a record 252 billion rupees, up 68% on year and 24% ahead of Nomura's estimates. Nomura reiterated a buy rating but cut its target price 7.7% to 1,560 rupees.

Confirmed

Global impact / market context

The oil-to-chemicals segment drives Reliance's profit, so its record Ebitda which means earnings before interest, tax, depreciation and amortization signals strong cash generation. Nomura raised its FY 2027 Ebitda forecast by 2%, suggesting analysts see the improvement as durable rather than a one-quarter spike, which supports the bull case.

Analyst inference

The profit jump came from lower crude costs, better margin capture which means keeping more profit per sale, and higher throughput, or volume processed, while cracks stayed near multidecade highs. Nomura's 7.7% target price cut stemmed from a roll-forward adjustment, a timing change rather than a weaker view.

Analyst inference

What to watch

1. Watch whether oil-to-chemicals Ebitda margin, which rose 2.5 percentage points on quarter to 10.9%, holds, since that profit-per-sale measure drove the record 252 billion rupee result. Confirmed
2. Watch crude basket costs and crack spreads, because lower crude costs and multidecade-high cracks lifted results; if either reverses, segment profit and Reliance's cash generation could fall. Analyst inference
3. Watch whether Nomura's raised FY 2027 Ebitda forecast of 2% and reiterated buy rating survive coming quarters, given the target price was cut 7.7% to 1,560 rupees on a roll-forward adjustment. Proposed

Evidence

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