News

This is a Mint Premium article gifted to you. Subscribe to enjoy similar stories.

New Delhi: May 1985. Cooperage Football Ground, Nariman Point, Mumbai.

Around 12,000 people are waiting patiently under canvas awnings put up over the ground. Some stands too are spilling over. On one side of the ground, a dais is set up, on which is placed a long table and some chairs. There’s a restless energy in the air. Some fan themselves with folded newspapers, others sip water from steel flasks.

Suddenly, heads turn towards the dais. A portly man in a dark suit steps up, followed by a few others. The crowd instinctively breaks out into applause.

The intensity of the cheer grows as the man gets up to speak into the microphone. Many stand on their seats to get a better look. The man raises his hand in greeting, adjusts the microphone and peers into the sea of faces. Their excitement is palpable, driven by an acute sense of being part of history in the making.

The event was no ordinary gathering—it was the first time an Indian company was holding its annual general meeting in a stadium to accommodate its growing legion of faithful shareholders.

The company, as it was known then, was Reliance Textiles. And the unassuming man standing on the dais was none other than Dhirubhai Hirachand Ambani, the man who didn’t just build India’s largest company, but also laid the foundation for the country’s modern equity culture.

Reliance has come a long way today from its textile days, but if there is one thing which has remained common throughout its decades-long journey, is that the stock has never shied away from testing investors’ patience with prolonged spells of underperformance, be it in the 1980s, 1990s or mid-2000s.

Of course, every stock tests its investors’ patience at times—cycles of underperformance are, after all, part of the market’s nature. But with Reliance Industries Limited (RIL), these pauses feel larger than life, thanks to the company’s sheer size and heft, which makes it a proxy for the India growth story itself.

The most recent lull came in the last couple of years, when the behemoth severely underperformed the benchmark. But 2025 has brought a sharp reversal, with RIL soaring 24% this year so far against a 7% rise in the Nifty.

A ₹20-trillion market cap company making such outsized moves inevitably leaves investors (and competitors) asking the important question—what is making the elephant dance? And, more importantly, can it sustain?

If you own the world’s largest single-site petroleum refinery, run the largest petcoke gasifier globally, are the world’s largest integrated polyester producer, and rank among the top five firms globally in producing a host of petrochemicals, and this segment still accounts for less than half your cash flows, then you must be doing something right.

Or, in this case, a lot of things.

2024-25 marked a turning point in RIL’s corporate journey as its consumer-facing businesses of telecom and retail contributed over half of its segmental Ebitda (earnings before interest, taxes, depreciation, and amortization).

For a market perspective, this shift has been enough to break the stock’s recent inertia.

“RIL, as a large-cap stock, usually behaves this way—two-three years of consolidation, followed by an up move. However, this time around, the rally is sharper because of the business mix," Rajesh Palviya, senior vice president of research at Axis Securities, told Mint. “Sectors like retail and telecom command higher multiples than oil and gas. So if an investor wants to take an exposure to any of the three sectors, RIL is a good bet," he added.

There’s also a lot of buzz around the demerger of consumer businesses, as has happened with Jio Financial in the recent past. This, too, is drawing in buyers, he further said.

RIL comprises four main verticals. The biggest is the Oil to Chemicals (O2C) segment, under which the company converts crude oil into various petrochemicals. They are used by a wide range of industries like packaging, consumer durables, healthcare, textiles, automobiles and others. The segment also includes fuel retailing, aviation fuel and bulk wholesale marketing. The other verticals are oil and gas exploration, digital services (which houses telecom major Jio) and retail.

RIL also has a host of smaller businesses and revenue streams, which are clubbed as ‘other’ income. To give some context of RIL’s gargantuan scale, the company reported ‘other’ income of ₹55,859 crore in 2024-25. This was more than the annual revenue of corporate biggies like Bajaj Auto ( ₹51,431 crore), Jindal Steel ( ₹48,932 crore), Power Grid Corporation ( ₹46,325 crore), Adani Ports ( ₹32,383 crore) and Asian Paints ( ₹30,323 crore).

RIL’s traditional O2C business still makes up for almost 60% of its revenue and around 40% of its bottomline. However, this business is facing significant headwinds and margin compression, largely due to new supplies from China in a weak demand environment.

Fuel cracks, which represent the difference between the prices of crude oil and the fuels extracted from it, plunged 36-41% on an annual basis last fiscal year. Margins of petrochemical products like polyethylene (PE) and polypropylene (PP) too dropped up to 10%, hit by weak demand from China, EU and other markets, coupled with overcapacity and high inventory build up.

While the O2C segment saw revenue grow 11% to ₹6.2 trillion last year compared to 2023-24, aided by strong fuel demand in India, Ebitda dropped 12% and margins contracted by 220 basis points to 8.8%.

Earlier, any weakness in Reliance’s core petrochemicals business would cast a long shadow over the stock. The situation has now changed, thanks to its fast-growing consumer-facing ventures—telecom and retail. They have gained considerable scale and have emerged as RIL’s new growth engines.

The company’s 2024/25 numbers underscored this shift in clear terms.

While the O2C segment’s Ebitda contracted 12% in 2024-25 over the year ago, that of its retail and digital businesses grew at a healthy 9% and 17%, respectively.

“Prior to venturing into retail/telecom, RIL’s earnings growth was determined by either: a) capex (new refining/chemical capacities), or b) margin cycles. Capex cycles then tended to impact stock performance," analysts at JP Morgan stated in a recent note.

But the equation has now changed, with telecom and retail accounting for more than half of Ebitda. In fact, JP Morgan analysts expect RIL’s consumer businesses to account for almost all of the net Ebitda growth over the next three years.

An email sent to RIL on its business performance did not elicit any response.

Jio Infocomm, which launched in the second half of 2016, took the crown of the largest telecom operator in India in just over three years of starting operations. It has maintained the gap with rivals.

As per Trai’s latest subscription data, India had 1.16 billion mobile subscribers by May-end. Reliance Jio had the largest market share at 40.92%, followed by Bharti Airtel (33.61%), Vodafone Idea (17.61%), BSNL (7.82%) and MTNL (0.04%).

Jio, last year, surpassed China Mobile to become the world’s largest mobile operator in terms of data traffic. Data traffic on its network increased 19.5% on-year to 49 exabytes in the fourth quarter of 2024-25. One exabyte equals 1 billion gigabytes. Jio also boasts of 191 million 5G users, the most globally, outside of China.

Industry-wide tariff hikes over the past several quarters and growing 5G subscriber mix has propelled Jio’s average revenue per user (Arpu) to ₹206.2 in the fourth quarter, a sequential rise of 1.4%, compared to flat growth for Airtel.

Continued traction in its home broadband service— JioAirFiber—and launch of cloud services for enterprise customers are adding fresh momentum to this vertical, leaving analysts gung-ho about its prospects.

“Telecom will remain the bright spot as Arpu hike reflects in earnings with capex continuing a downward trend. We expect 13% CAGR revenue growth for Jio over the next two years," global brokerage firm Bernstein stated in a note. “We also expect acceleration in the Jio AirFiber rollout, driving faster broadband additions and supporting overall growth momentum. Market share gains should continue as Jio reaches 500 million subscribers and 48% revenue share by FY27," the brokerage firm added.

Similar economies of scale are at play at Reliance Retail, which straddles major consumption segments of grocery, consumer electronics, fashion and lifestyle, and pharma.

With gross revenue of ₹3.3 trillion in FY25, it is the country’s biggest retailer by a wide margin. It opened 2,659 stores last financial year, taking the total count to 19,340.

Reliance Retail’s steady push into segments like quick commerce, private labels and luxury goods is also winning nods from the Street, which now sees enough room for the stock to be re-rated.

“RIL’s recent outperformance has resulted from trust being rekindled in the long-term prospects of the company due to its massive capex in new energy, retail, telecom, and digital services, thereby cementing its transition away from being a classical oil & gas company," Vishnu Kant Upadhyay, assistant vice president, research & advisory, Master Capital Services, told Mint.

“The management envisions profitability doubling over the next four–five years, thereby indicating sturdy growth prospects," he added.

A quirk of evaluating an 800-pound gorilla like Reliance is that growth levers big enough to transform other companies often appear as mere footnotes in its own narrative. Take RIL’s media and entertainment joint venture, JioStar, which was formed in November 2024 following the merger of RIL subsidiary Viacom18’s media and cinema businesses with Disney’s Star India.

JioStar posted revenue of nearly ₹9,500 crore for the November 2024-March 2025 period—already exceeding Zee Entertainment Enterprises’ full-year revenue of ₹8,294 crore. While Zee currently enjoys a higher Ebitda margin, any improvement in efficiency and scale at JioStar could provide meaningful upside for Reliance.

Similarly, the company is picking up pace in its New Energy business, which includes segments like solar and wind power, fuel cell, battery, electrolysers and others.

At a recent analyst meet, RIL announced the start of its first line of HJT (heterojunction) solar modules manufacturing facility of 1 gigawatt, which can be scaled up in phases to 10 gigawatt by early 2026.

“Our channel checks with key industry participants reveal that RIL has offered to sell its HJT modules in the lucrative domestic market since the rollout of its power generation business is some time away," Nuvama Institutional Equities said in a note on 30 June.

In addition, RIL plans to set up a 30 gigawatt hours (GWh) battery facility, while green hydrogen and electrolyser manufacturing units are on track.

At its annual general meeting in August 2024, RIL chairman Mukesh Ambani had guided for a remarkable scaling up of its New Energy business, exuding confidence that this segment will become as big and profitable as the O2C business in the next five-seven years.

“RIL’s New Energy rollout shall not only add 50%-plus to PAT, but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035," Nuvama added.

Technical signals too suggest RIL’s current rally may still have legs.

“Both fundamental and technical projections are indicating 26,500-27,000 levels for the Nifty, that is 5-10% rise from current levels. I think Reliance will take a lead in this up move," Axis Securities’ Palviya said. “For the stock itself, after a two-three year consolidation, range breakout is happening on the short-term charts, and it is on the verge of touching its all-time high of ₹1,608. Once the stock scales this peak, it can touch ₹1,750 in the next six to 12 months," Palviya added.

Of course, it would be naive to assume that the company’s current trajectory is entirely devoid of risks. Weak global growth, exacerbated by Donald Trump’s tariff tantrums, poses a serious headwind for oil and petrochemicals demand. Further compression in O2C margins can deal a heavy blow to RIL, as this segment still remains its cash cow. Delay in telecom tariff hikes and a lacklustre consumption environment too can weigh on its consumer businesses, which can saddle its balance sheet with debt—a problem it had to contend with in the past.

That said, Reliance’s execution excellence, economies of scale and an uncanny ability to reinvent itself are being handsomely rewarded by the market. Initial doubts about its consumer forays are being laid to rest in each successive earnings report.

After all, that was Dhirubhai Ambani’s original vision: to build a company that would always think and bet big, no matter what scale it reaches. For shareholders, that is both the risk and the reward of investing in Reliance.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

You are just one step away from creating your watchlist!

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Your session has expired, please login again.

You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.

This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp