Reliance Industries Shares Fall Nearly 10% In Two Weeks – Here’s Why

RIL Share Price: Shares of Reliance Industries Ltd (RIL), India’s most valuable company, have declined nearly 10 per cent over the past two weeks, erasing close to Rs 2 lakh crore in market capitalisation. Between July 8 and July 25, the stock declined in 10 out of 13 trading sessions.

Despite this fall, RIL stock is still up over 14 per cent so far in 2025. However, on a one-year basis, it is down 6.7 per cent. Over the last five years, RIL has delivered a return of around 30 per cent.

So what is dragging the stock down?

Why RIL Shares Are Falling

The immediate trigger appears to be RIL’s quarterly results for the period ended June 30, 2025 (Q1 FY26), which were announced post-market hours on July 18. On that day, the stock closed at Rs 1,476. Following the results, it fell 3.2 per cent the next day. As of July 25, the stock has declined around 5.8 per cent since the results.

Ajit Mishra, senior vice president, research, Religare Broking, believes the weakness in RIL’s core businesses is weighing on the stock. “Despite strong headline profits, the core retail and Oil-to-Chemicals (O2C) business segments failed to meet expectations.”

Adding to the pressure, he said, the European Union (EU) has imposed new restrictions on Russian oil, including a ban on importing petroleum products refined from Russian crude, even if processed outside Russia.

“Since Reliance is a major buyer of discounted Russian oil and a significant exporter to Europe, these curbs threaten its profit margins and access to premium markets, increasing uncertainty around its future earnings potential.”

How Were RIL’s Q1 FY26 Results

According to Vaqarjaved Khan, CFA, senior fundamental analyst at Angel One, RIL’s Q1 results for FY26 were disappointing. “Standalone results for the company disappointed, and it was below our expectations,” he said, noting that standalone EBITDA was 6.8 per cent lower than expected. This was despite better refining margins and petrochemical spreads quarter-on-quarter. A temporary plant shutdown and possible inventory losses due to a fall in Brent crude oil prices likely played a role, he explained.

The company’s retail business also underperformed. “Retail numbers fell short of street expectations,” Khan said. He added that markets were also hoping for an announcement on Jio Platforms’ initial public offering (IPO), which did not happen.

Reliance did report a 78 per cent year-on-year (YoY) jump in consolidated profit; however, that was largely due to a one-time gain. “Surge in profits was on account of sale of Asian Paints share leading to gain of Rs 8,924 crore which is a one-off gain,” Khan said.

“Post adjustment for one-off gains, adjusted profit after tax (PAT) was 11.5 per cent below expectations,” Khan said.

Reliance Retail, on the other hand, missed key growth metrics, particularly in store and electronics expansion. Consolidated EBITDA missed estimates by 5 per cent, and margins fell short by 230 basis points (bps).

However, there were a few positive highlights in RIL’s Q1 results as well. “Jio digital services performed the best with EBITDA surging 24 per cent YoY and better-than-expected margin performance,” he said.

“There was a hint of positive lining during the quarter on account of company sharing information of ongoing projects in the new energy segment,” Khan added. The company has guided that its cell manufacturing unit will start in one to two quarters and the entire ecosystem could be commercialised in four to six quarters, he highlighted.

Sumit Pokharna, VP–Fundamental Research at Kotak Securities, also attributed weak Q1 numbers as the key reason behind the stock’s decline. “RIL reported Q1 FY26 results below our expectations. The miss was mainly due to retail and O2C,” he said. The company’s adjusted PAT was 7.4 per cent below Kotak Securities’ expectations.

RIL’s consolidated EBITDA rose 11 per cent YoY but declined 2 per cent quarter-on-quarter (QoQ), coming in 4 per cent lower than Kotak’s estimate.

Retail segment’s EBITDA rose over 12.5 per cent YoY, but declined 5.1 per cent QoQ and the O2C segment’s EBITDA rose 11 per cent YoY, but fell 3.8 per cent QoQ. Retail and O2C EBITDA were 6.4 per cent and 7 per cent, respectively, below their estimates.

EBITDA for the digital segment grew 23 per cent YoY and 6 per cent QoQ, and was ahead of our estimates by 2.2 per cent, said Pokharna. He added that the exploration and production (E&P) segment also beat estimates.

“Despite the miss, the retail business outlook is sanguine and improved margins in telecom are a positive,” Pokharna said.

What Should Investors Do

Is this correction a chance for long-term investors to accumulate more?

“In our view, the overall outlook is positive,” Pokharna said. “With 5G investments behind, capex should not rise. Apart from improvement in Retail, any firm announcements of telecom IPO, and likely tariff hike before that, will be a catalyst.”

Mishra of Religare Broking suggested that long-term investors should view this correction as a buying opportunity. “Reliance’s new growth-driving businesses, particularly Jio (telecom and digital platforms) and Retail, are performing strongly with robust growth and profitability. Additionally, the company’s expanding new energy business aligns well with global energy transition trends, offering future potential. The recently strengthened media business also provides diversified revenue streams. While challenges remain in O2C due to external factors like EU restrictions, Reliance’s diversified portfolio and focus on high-growth sectors support a positive long-term outlook.”