Reliance Industries Shares Gain on Earnings, Enters Overbought Territory

Reliance Industries shares (NSE:RELIANCE) have jumped 6.27% over the past five days, fueled by robust second-quarter earnings for fiscal year 2026. The surge has pushed the stock into overbought territory, signaling potential short-term volatility. The stock's upward trajectory reflects strong financial performance across key segments. The shares have gained 20.30% year-to-date.

RIL’s consolidated net profit for Q2 FY26 increased by 9.7% year-over-year to ₹18,165 crore, compared to ₹16,563 crore in the same quarter last year. Revenue from operations also saw a 10% increase, reaching ₹2,83,548 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 14.6% YoY, amounting to ₹50,367 crore, with the EBITDA margin improving by 80 basis points to 17.8%.

Segment Highlights

Jio Platforms, RIL's telecom arm, reported a 14.6% YoY increase in revenue to ₹36,332 crore, with Profit After Tax (PAT) rising by 12.8% to ₹7,379 crore. The Average Revenue Per User (ARPU) improved to ₹211.4, driven by increased customer engagement and the rollout of 5G services.

Reliance Retail achieved a 19% YoY growth in revenue, totaling ₹79,128 crore, while PAT increased by 21.9% to ₹3,457 crore. The company expanded its store network by adding 412 new outlets, bringing the total to 19,821 stores.

The Oil-to-Chemicals (O2C) segment experienced a 3.2% YoY increase in revenue to ₹1,60,558 crore. EBITDA saw a significant 20.9% increase to ₹15,008 crore, with the EBITDA margin improving by 130 basis points to 9.3%.

Following the earnings announcement, RIL's share price surged by approximately 3% yesterday, hitting a three-month high. This positive movement was a significant factor in the Nifty 50 index reaching its highest level since October 2024. However, not all reports painted a rosy picture, with some noting that Reliance missed quarterly profit estimates due to weakness in its chemicals business. Despite fluctuations, the rise in share prices helped the Nifty reach a one-year high, counteracting pressure from the IT sector.

RIL is also making strides in its New Energy initiatives, aiming to establish a 20 GWp solar photovoltaic manufacturing capacity and a 100 GWh battery giga-factory. The company has commissioned four PV module lines, with the first cell line expected to be operational by October 2025. Additionally, RIL is developing a 550,000-acre site in Kutch for renewable energy projects.

While RIL's recent financial performance and strategic initiatives have boosted market confidence, the stock's overbought status suggests potential short-term volatility. Analysts will likely continue to monitor these developments closely, balancing the positive earnings reports with the technical signals indicating a possible correction. The company's progress in renewable energy and continued growth across its diverse business segments suggest a promising long-term outlook, even as short-term price action may experience fluctuations.