Reliance mostly pulls off wartime balancing act

Asian Paints

20/07/2026 13:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Shritama Bose

    MUMBAI, July 20 (Reuters Breakingviews) - India's economy and currency are getting battered by the latest energy shock, but the performance of its largest company stands in stark contrast. The cash cow refining unit of Mukesh Ambani's $186 billion Reliance Industries RELI.NS grew earnings strongly last quarter despite crude supply pressures. Its accomplishment is as much a marker of its growing challenges as a testament to the group's operational resilience.
In an investor meeting on Friday, Chief Financial Officer V Srikanth described as "extraordinary" the economic conditions and supply disruptions of the three months to the end of June. Yet revenue at Reliance's oil-to-chemicals business reversed the previous year's decline to surge 30%. EBITDA grew 17%, faster than its pace a year ago.
That offers some respite for Ambani's conglomerate, which derives well over half of its annual revenue from the refining unit. Concerns around the Iran war have dragged Reliance shares down 15% so far this year, twice as much as the benchmark Nifty 50 Index .NSEI.
The company improved its performance by switching crude sourcing from the Middle East to Russia, Latin America and Africa. It helped that its complex refining capabilities can profitably process heavier grades of crude. Reliance also redirected its refined goods from Europe to markets like Singapore and Australia, where higher supply deficits supported margins.
That wasn't enough, though, to offset the hit from absorbing higher crude prices on fuel sales at Indian pumps. An official mandate to divert capacity to producing liquefied petroleum gas for domestic consumption from more lucrative export-bound products weighed on the unit's EBITDA margin, which fell by a full percentage point to 8.4%.
That shows the limits to Reliance's operational strengths. As hostilities in the Middle East flare up again after a short-lived ceasefire, the group will be forced to keep up its delicate balancing act for longer.
Pressure on earnings could intensify after New Delhi hiked levies on diesel and jet fuel exports earlier this month, after two months of gradual cuts. Crude price spikes may also become harder to manage whenever China, whose considerable stockpiles have allowed it to stay away from oil buying, returns to the market.
The spate of extraordinary conditions looks poised to last. That means Ambani's flagship has to fight to keep to its winning ways.  
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CONTEXT NEWS
Reliance Industries on July 17 reported a 25% year-on-year decline in consolidated net profit to 231.96 billion rupees ($2.4 billion) for the three months to the end of June. Profit fell due to the effect of a high base caused by a one-off sale of the company's shares in Asian Paints in the corresponding period last year.
The company's flagship oil-to-chemicals division logged a 30% increase in revenue to 2 trillion rupees and a 17% rise in EBITDA to 170 billion rupees during the reporting quarter.   
     

(Editing by Antony Currie; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))