Mukesh Ambani's consumer empire overtakes decades-old energy business of RIL
Mukesh Ambani
from being an oil baron to a consumer titan, every second rupee of Reliance Industries Ltd's (RIL) operating cash profit now comes from its twin consumer-facing ventures of
Reliance Retail
and
Reliance Jio
.
'Reliance Retail + Telecom now account for ~54% of total FY25 consolidated EBITDA,' wrote Sanjay Mookim, analyst at JPMorgan in a recent report. 'Prior to venturing into retail/telecom, RIL's earnings growth was determined by either capex (new refining/chemical capacities), or margin cycles. Capex cycles then tended to impact stock performance.'
Back in FY17, a staggering 96% of Reliance's EBITDA came from its core energy operations. Fast forward to FY25, and the consumer verticals have taken center stage. According to JPMorgan, RIL's adjusted consolidated EBITDA is pegged at Rs 165,444 crore in FY25, rising to Rs 216,103 crore by FY28—driven almost entirely by Retail and Jio.
'These will account for almost all of the net EBITDA growth over the next three years,' Mookim said. While the group operated at materially negative free cash flow over the past three years due to heavy telecom spending, that cycle is winding down. JPMorgan expects RIL to turn free cash flow positive, even with continued investments in new energy, retail, and petrochemicals.
With an annual EBITDA run-rate of $20 billion, the brokerage sees RIL's net debt to EBITDA remaining below 1x, indicating a healthy balance sheet and consistent cash flow generation. JPMorgan has an Overweight rating on the stock with a target price of Rs 1,568 by March 2026.
RIL's consumer empire has been built on massive investment: Rs 6 lakh crore in free cash flow has been deployed into consumer businesses, creating Rs 18 lakh crore in equity value, according to Jefferies.
Still, while consumer EBITDA has surged 30% over the past two years, post-minority contribution hasn't translated into proportional growth in PAT, a key gap analysts are monitoring.
Also read | Reliance Industries share price prediction: Brokerages see up to 31% upside after Q4 results
Telecom: The New Growth Engine
The telecom juggernaut Jio is leading the earnings charge. Jefferies forecasts 21% EBITDA CAGR for Jio between FY25–27, supported by an improving pricing environment and growth in the home broadband business.
'We believe telecom is the best way to play consumption in India due to which valuations also have scope to re-rate,' Jefferies said, adding that moderating capex intensity will drive a 10x jump in free cash flow over FY25–27.
Bernstein sees Jio's EBITDA margin expanding from 53.4% in FY25 to 58.8% in FY27, led by greater 4G/5G monetisation and ARPU upgrades.
'Telecom will remain the bright spot as ARPU hike reflects in earnings with capex continuing downward trend. We expect ~13% CAGR revenue growth for Jio over the next 2 years. We also expect acceleration in Jio AirFiber rollout, driving faster broadband additions and supporting overall growth momentum. Market share gains should continue as Jio reaches ~500 Mn subs & ~48% revenue share by FY27,' Bernstein's Rahul Malhotra said.
Retail: Quiet Yet Powerful
Retail is also scaling up fast. EBITDA CAGR for Reliance Retail is expected to clock 15–20% over FY25–27, according to Jefferies and Bernstein. Margins are improving too, seen rising from 7.6% in FY25 to 8.0% by FY27, driven by stronger growth in private labels and operational efficiencies.
Bernstein estimates the retail EBITDA mix will reach 15% by FY27, while digital businesses (primarily Jio) will contribute 40–45% of total EBITDA over the next five years.
'We expect Retail to rebound post the store rationalization & get back to mid-single digit growth in FY25 and double digit growth in FY27. Retail capex should normalize with focus on improving revenue/sqft as older stores mature. We see the following reasons for retail to grow: (1) New tax laws boosting consumer spending with higher disposable income in the hands of individuals; (2) Weddings and festive seasons providing a boost to growth; (3) Fast fashion pace growing rapidly,' Bernstein said.
With
Mukesh Ambani
's consumer bet reshaping the future of India's most valuable company, analysts see chances of RIL shares getting re-rated.
Also read | Reliance Industries shares at inflection point. 6 reasons why FY26 could be the year of big re-rating
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