Today’s top research idea: Reliance Industries: Standalone: O2C – From trough to takeoff

AHMEDABAD, JULY 24: RIL’s O2C business provides exposure to volatility in refining/petchem: Following a strong 1QFY27 earnings performance,we see upside risks to Reliance Industries’ (RIL) O2C earnings amid: 1) robust refining GRM, supported by healthy summer demand, 2) refinery disruptions in Russia (refinery runs down 26% YoY in Jul’26), 3) refining capacity outage in the Middle East (~2mb/d), and 4) reduced refinery runs in China (down 2.7mb/d (~18%) YoY in Jun’26). Limited global refining capacity additions in FY27/28 (IEA CY26/27 est.: 1/0.15 mb/d) should underpin a favorable medium-term outlook for the O2C business. Assuming RIL’s standalone performance remains similar to 1QFY27 in both 2Q and 3QFY27, we estimate a ~4.5% upside to our FY27 consolidated EBITDA estimate.

Refining: Strong near-to-medium term outlook; limited capacity growth in CY27 n Global refining fundamentals remain supportive, driven by elevated unplanned outages, structurally tight effective capacity (S&P Global forecasts refinery downtime at 9.7mb/d in Jul’26), and healthy product cracks. While refinery downtime is expected to ease sequentially, limited capacity additions (1/0.15 mb/d in CY26/27) and the need to rebuild refined product inventories should keep refining margins above historical levels over the medium term. n CY26/27 capacity additions at only 1/0.15 mb/d to keep market tight: According to S&P Global, net global refining capacity additions remain modest at ~1mb/d in CY26 and just ~0.15mb/d in CY27, while further refinery closures are now considered unlikely. This points to a relatively balanced supply outlook with limited downside risk to refining margins. 1,150 1,275 1,400 1,525 1,650 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26 Jul-26 Reliance Industries Nifty – Rebased 23 July 2026 Company Update | Sector: Oil & Gas Reliance Industries 24 July 2026 4 n Planned-unplanned refining outages capping global refining output: Elevated unplanned refinery outages across Russia, the US, and China continue to keep effective global refining capacity tight (global refinery downtime averaged 11.3mb/d in Jun’26). While maintenance-related downtime is expected to ease (S&P Global forecasts refinery downtime at 9.7mb/d in Jul’26), geopolitical disruptions and operational risks are likely to sustain a supportive margin environment. n Seasonality and Russia’s refined product ban keeping cracks elevated: Gasoline, diesel, and jet fuel cracks are expected to remain well above historical averages as global refined product inventories require replenishment (Current MS/HSD/ATF cracks: USD59/32/55 per bbl; LTA: USD18/12/27.8 per bbl). Gasoline cracks should remain strong, supported by peak summer driving demand, while jet fuel cracks are likely to benefit from robust seasonal air travel. Diesel cracks are expected to remain firm, driven by Russia’s diesel export restrictions (link) and lower refinery exports. According to Kpler, Russian diesel and gasoil loadings declined to 234 kb/d in early Jul’26, vs 400 kb/d in Jun’26 and a CY25 average of 817 kb/d, underscoring tightening global supply.

Valuation and view: Our SoTP-based TP of INR1,550/sh values the standalone O2C/E&P business at INR415/share, with additional value from JPL (INR431/share), RRVL (INR515/share), New Energy (INR174/share), RCPL (INR40/share) and JioStar (INR26/share) : REPORT by MOTILAL OSWAL RESEARCH

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)

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