Reliance's Earnings Momentum and Its Implications for Long-Term Investors

Reliance Industries Limited (RIL) has emerged as a compelling case study in corporate reinvention, with its Q3 2025 earnings underscoring a 7% year-on-year (YoY) surge in consolidated net profit to ₹18,540 crore and a 7.7% revenue increase to ₹2.40 lakh crore, according to CNBC TV18. This performance, driven by digital services and retail, raises critical questions for long-term investors: Is this earnings momentum sustainable amid macroeconomic headwinds and strategic pivots?

Strategic Pillars: Digital Dominance and Green Energy

Reliance's digital arm, Jio, remains a profit engine. Its 24% YoY net profit jump to ₹6,477 crore in Q3 2025 was fueled by a 170 million 5G subscriber base, contributing 40% of wireless traffic, as reported by Moneycontrol. Jio's ARPU (average revenue per user) of ₹203.3 reflects pricing power in India's competitive telecom sector. Meanwhile, Reliance Retail's 9% EBITDA growth to ₹6,840 crore highlights the company's ability to scale physical and e-commerce platforms, according to Trendlyne's financial ratios.

However, the true test of sustainability lies in Reliance's long-term bets. The company's 100 GW renewable energy target by 2030—backed by a $10 billion investment in solar, hydrogen, and battery giga factories—positions it to capitalize on India's energy transition, as highlighted at Reliance's AGM 2025 in The Economic Times. These initiatives, while capital-intensive, align with global decarbonization trends and could diversify RIL's revenue streams beyond its traditional oil-to-chemicals business.

Financial Leverage: Resolving the Debt-to-Equity Discrepancy

A key concern for investors is Reliance's debt profile. Conflicting reports cited a debt-to-equity ratio of 0.14 (June 2025) versus 0.418 (March 2025); TopStockResearch's debt-to-equity analysis captured this discrepancy. The Q3 FY2025 balance sheet clarifies this: as of December 2024, RIL's debt-to-equity ratio stood at 0.418, with shareholders' funds at ₹543,087 crore and long-term borrowings at ₹172,025 crore, per Moneycontrol's balance sheet. While this ratio exceeds its five-year average of 0.388, it remains conservative compared to global peers like ExxonMobil (0.12 in March 2025), according to Macrotrends' data. Reliance's net debt-to-EBITDA of 0.60 in Q3 2025 further underscores manageable leverage, as noted by Marketscreener.

Risk Mitigation and Market Volatility

Reliance's diversified business model mitigates sector-specific risks. While its oil and gas segment faced a 6% revenue decline in Q3 2025 due to lower KG D6 field production, Yahoo Finance's earnings report documented this decline; the company's EBITDA margin in this segment improved to 87.4%, reflecting cost discipline. This resilience is critical in a volatile energy market, where geopolitical tensions and fluctuating crude prices could disrupt peers.

Moreover, Reliance's strategic partnerships—such as with BP Exploration in the Saurashtra basin and Ambri for battery technology—signal a proactive approach to innovation, as Ajupress observed. These alliances reduce R&D costs and accelerate entry into high-growth sectors like green hydrogen.

Long-Term Outlook: Balancing Ambition and Execution

For long-term investors, Reliance's success hinges on three factors:
1. Execution of Green Energy Projects: Delays in the Jamnagar Giga Complex or rising raw material costs could strain margins.
2. Digital Monetization: Jio's upcoming IPO (planned for 2026) will test its ability to convert user growth into shareholder value, as reported by Malkari.in.
3. Regulatory Tailwinds: India's 2025 Union Budget, with increased allocations for renewable energy, provides a favorable policy environment, according to ESG360.

Reliance's ROE of 6.49% and net profit margin of 6.81% in Q3 2025, per Moneycontrol's key financial ratios, suggest moderate returns, but its strategic pivot toward high-margin digital and green energy assets could elevate these metrics over time. Analysts project that the green energy segment alone may contribute 10% of RIL's EBITDA by FY2026, The Economic Times reports, a significant uplift from current levels.

Conclusion

Reliance Industries' earnings momentum in Q3 2025 reflects a company in transition. While its debt profile remains stable and its digital and retail segments deliver consistent growth, the true test of sustainability lies in the execution of its green energy ambitions. For long-term investors, the key is to monitor capital allocation efficiency, regulatory support, and the pace of technological adoption. If Reliance can replicate its Jio success in renewable energy, it may well cement its status as a global industrial leader.