'Reliance O2C profitability strong; Russian crude impact limited': Jefferies; maintains 'buy' call
On investor concerns around Russian crude, Jefferies estimated the benefit for RIL at only about US$1 per barrel in refining, translating to roughly $500 million in annual EBITDA – just 2.1% of projected consolidated EBITDA for FY27.
- Sep 4, 2025,
- Updated Sep 4, 2025 7:59 PM IST
Reliance Industries’ (RIL) oil-to-chemicals (O2C) business remains resilient with profitability in the first half of FY26 tracking 15% higher year-on-year, Jefferies said in a new report. The brokerage attributed the strength to firm demand for auto fuels, particularly diesel, and forecast double-digit growth in consolidated EBITDA for FY26.
Jefferies maintained its “buy” rating on RIL with a price target of ₹1,670, implying a 22% upside from current levels. The firm said the stock is trading at a discount, imputing little value to new energy and data center businesses, and expects the EV/EBITDA multiple to invert as earnings visibility improves.
On investor concerns around Russian crude, Jefferies estimated the benefit for RIL at only about US$1 per barrel in refining, translating to roughly $500 million in annual EBITDA – just 2.1% of projected consolidated EBITDA for FY27. “The Russian crude advantage is manageable and not a key driver of profitability,” the report noted.
European diesel spreads have remained firm following the EU’s ban on imports of refined products made from Russian crude. With European inventories below the five-year average, Reliance has been able to flexibly export diesel to the EU, aided by refinery closures globally tightening supply. Meanwhile, gasoline margins have been supported by stable US inventories.
Jefferies also flagged potential regulatory risks from Jio’s impending IPO, which could invite tariff interventions. However, with improving visibility across O2C, telecom, and retail businesses, the brokerage expects consolidated earnings to grow steadily through FY28.
Looking ahead, Jefferies projected net profit to rise from ₹69,600 crore in FY25 to over ₹1 lakh crore by FY28, with EPS climbing from ₹51.5 to ₹76.2 during the same period.
Reliance Industries’ (RIL) oil-to-chemicals (O2C) business remains resilient with profitability in the first half of FY26 tracking 15% higher year-on-year, Jefferies said in a new report. The brokerage attributed the strength to firm demand for auto fuels, particularly diesel, and forecast double-digit growth in consolidated EBITDA for FY26.
Jefferies maintained its “buy” rating on RIL with a price target of ₹1,670, implying a 22% upside from current levels. The firm said the stock is trading at a discount, imputing little value to new energy and data center businesses, and expects the EV/EBITDA multiple to invert as earnings visibility improves.
On investor concerns around Russian crude, Jefferies estimated the benefit for RIL at only about US$1 per barrel in refining, translating to roughly $500 million in annual EBITDA – just 2.1% of projected consolidated EBITDA for FY27. “The Russian crude advantage is manageable and not a key driver of profitability,” the report noted.
European diesel spreads have remained firm following the EU’s ban on imports of refined products made from Russian crude. With European inventories below the five-year average, Reliance has been able to flexibly export diesel to the EU, aided by refinery closures globally tightening supply. Meanwhile, gasoline margins have been supported by stable US inventories.
Jefferies also flagged potential regulatory risks from Jio’s impending IPO, which could invite tariff interventions. However, with improving visibility across O2C, telecom, and retail businesses, the brokerage expects consolidated earnings to grow steadily through FY28.
Looking ahead, Jefferies projected net profit to rise from ₹69,600 crore in FY25 to over ₹1 lakh crore by FY28, with EPS climbing from ₹51.5 to ₹76.2 during the same period.