---
endpoint: analytics
pattern: Energy
status: done
latency_ms: 162253
conversation_id: 783aa3d7-3e30-4520-be5c-fde52b0de3ca
citations: 4
created: 2026-05-31 18:42:39Z
---

# What are the key risks to Reliance Industries’s growth trajectory?

# Key Risks to Reliance Industries' Growth Trajectory

Reliance Industries (RIL) is targeting a doubling of group EBITDA by FY30, anchored by simultaneous scale-up of Jio (telecom), Reliance Retail, the New Energy build-out, and ongoing O2C/upstream operations [5]. CLSA's June-2025 "Triggers ahead" note (the most recent internal coverage at our disposal) and the Q4 FY26 (Apr-2026) earnings call together flag a clear taxonomy of risks. The growth trajectory rests on multiple moving parts executing on schedule, and the principal risks are concentrated in five buckets.

## 1. Execution Risk in Downstream / New-Energy Capex

CLSA explicitly lists this as the lead risk: **"The main risks include delays in commissioning key downstream expansion … Delay in the start of new energy projects and specific tariffs and restrictions that limit export margins for the new energy business is likely to be a negative event for the stock"** [1].

- The thesis depends on the **solar PV gigafactory (initial 10 GW phase), 30 GWh battery manufacturing line, 55 compressed-biogas plants, and electrolyser manufacturing** all coming online in 2025–2026; any slip pushes back the New-Energy EBITDA contribution that is supposed to eventually equal O2C in size [5].
- Within O2C, RIL is in the **midst of two very large projects — the integrated vinyl (PVC/CPVC) chain and the PTA expansion** — where management identified "**accelerated project execution**" as a "key priority," underscoring that timely commissioning is not yet assured [8].

## 2. Telecom Subscriber & ARPU Risk at Jio

The second leg of CLSA's risk list is **"a slower-than-expected pace of subscriber additions for telecoms … continued increases in telecoms capex"** [1].

- The bull case bakes in **~9–10m subscriber additions in 1QFY26 versus only +6m across all of FY25**, plus AirFiber broadband ramp, plus the flow-through of past tariff hikes plus a future tariff hike [2]. Any one of those failing to land delays the Jio EBITDA inflection that is central to the Jio IPO narrative.
- The vulnerability has already been visible: in 3QFY25 Jio missed on ARPU (Rs203 vs CLSA Rs206), trimming Jio EBITDA 4% below estimate even though gross subscriber adds beat [3]. In 4QFY25 net adds were 6.1m vs the 6.9m estimate, again a miss that had to be offset by ARPU [4].
- Higher-than-expected **5G/AirFiber capex** is called out as an explicit downside — Jio's network rollout could absorb cash longer than modelled [1].

## 3. Retail Recovery Could Stall Again

Retail has been the largest single drag on the stock — CLSA notes consolidated EBITDA was held back in FY25 because growth was "muted because of the scale-up of the hyper local e-commerce" and "Fashion & Lifestyle demand was a bit soft" [6]. The current bull thesis assumes **Retail EBITDA returns to high-teens YoY growth from 1QFY26** as the "operational streamlining" of store closures and inventory rationalisation completes [2].

- The downside scenario is straightforward: if streamlining is not actually "over" (CLSA's language), or if the consumer slowdown deepens, Retail simply does not reaccelerate to the high-teens trajectory and consolidated EBITDA growth misses.
- Quick-commerce and FMCG (Campa, Independence, JioMart) are new fronts with execution risk — RIL committed for the first time to **under-30-minute deliveries with no delivery/hidden charges**, a structurally low-margin promise that could compress retail profitability if competition (Blinkit, Zepto, Instamart) forces price action [4].

## 4. O2C Cyclical & Geopolitical Risks

CLSA flags **"decreased refining and petchem margins" and "a lower crude price"** as direct downside risks [1]. Management's own Q4 FY26 commentary on the call reinforces how fluid the O2C environment is:

- **Geopolitical / Strait of Hormuz exposure**: The March supply shock pushed crude premiums up to **$40/bbl** at one point and freight to 10–15x normal; even with cooling, "the situation is very fluid. Nobody really knows what's going to happen" — refining margins remain hostage to Middle East flows [8].
- **Petchem feedstock & demand**: Management described petchem still in "a state of shock," with non-integrated Asian/EU crackers cutting run-rates and downstream margins under "severe stress" — Reliance's integrated naphtha/ethane position is a defense, but the cycle recovery is what the model is paying for [8].
- **LNG / KG-D6 gas pricing**: Two of QatarEnergy's 14 LNG trains at Ras Laffan were hit, removing **~17% of capacity for an estimated five years** — net positive for RIL upstream pricing near-term, but a reminder that the upstream P&L is dictated by exogenous geopolitical events outside management's control [9].
- **Macro overlay**: The CFO explicitly called out **"Rupee depreciation, obviously, is an area of concern, 11% for the year and 4% just in March"** as a structural concern given India's wide current account gap — a weaker INR raises the rupee cost of imported crude that RIL refines [6].

## 5. Regulatory / Tariff / Tax Drag

- **Reintroduction of the Special Additional Excise Duty (SAED)** on petroleum products: management said *"Reintroduction of SAED is something which we have to reckon with. It was there during 2022 also and they have reintroduced it, and two tranches have also been announced. So, that's some risk that is there in the business which we will have to take"* [7]. This is a direct hit to refining margins that bypasses Reliance's operational levers.
- **New Energy export tariffs**: CLSA highlights that "specific tariffs and restrictions that limit export margins for the new energy business" would be a negative — meaning RIL's green hydrogen / green ammonia export economics (the Samsung C&T off-take and discussions with Japan/Korea/EU buyers) are exposed to trade-policy regimes the company does not control [1].

## Summary Risk Map

| Risk Bucket | Specific Driver | Severity to FY26-27 EPS |
|---|---|---|
| Capex execution | Solar gigafactory, battery, electrolyser, PVC, PTA delays | High — directly defers New Energy & O2C contribution [1][5] |
| Telecom | Jio sub-add miss, ARPU miss, higher-than-expected capex | High — Jio is the swing driver into the IPO [1][3] |
| Retail | Streamlining not really over; consumer-demand soft; quick-commerce margin drag | High — Retail is largest single driver of consolidated EBITDA reacceleration [2][4][6] |
| O2C cycle / geopolitics | Lower crude, weaker refining/petchem cracks, INR depreciation, Hormuz/LNG shocks | Medium-to-high — exogenous, can cut both ways [1][6][8][9] |
| Regulatory | SAED on petroleum, new-energy export tariffs | Medium — direct margin hit when imposed [1][7] |

The growth trajectory is essentially un-broken on paper, but it is concentrated in a 12–18 month window where five separate workstreams must all land within plan. The most-cited internal risk is **timing slippage on the downstream and new-energy capex pipeline combined with a slower-than-expected Jio inflection**, with the macro/geopolitical layer (crude, INR, Strait of Hormuz, SAED) sitting on top as a tail risk that can overwhelm the operational story in any given quarter.

---
**Sources**
[1] Reliance Industries – O-PF (Triggers ahead) — CLSA (24 Jun 2025) — Investment risks paragraph — 607962717LinqAlpha.PDF
[2] Reliance Industries – O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 1QFY26 growth-return outlook — 607962717LinqAlpha.PDF
[3] Reliance Industries – O-PF (First signs of improvement) — CLSA (16 Jan 2025) — 3QFY25 Jio/Retail recap — 607948395LinqAlpha.PDF
[4] Reliance Industries – O-PF (Back in the game) — CLSA (27 Apr 2025) — 4QFY25 results — 607957087LinqAlpha.PDF
[5] Reliance Industries – O-PF (Triggers ahead) — CLSA (24 Jun 2025) — Investment thesis / FY30 doubling — 607962717LinqAlpha.PDF
[6] Reliance Industries Ltd., Q4 FY26 Earnings Call (24-Apr-2026) — CFO Srikanth Venkatachari on Rupee, supply shock
[7] Reliance Industries Ltd., Q4 FY26 Earnings Call (24-Apr-2026) — Srinivas Tuttagunta on SAED reintroduction
[8] Reliance Industries Ltd., Q4 FY26 Earnings Call (24-Apr-2026) — Amit Chaturvedi on petchem feedstock disruption
[9] Reliance Industries Ltd., Q4 FY26 Earnings Call (24-Apr-2026) — Sanjay Roy on Ras Laffan / LNG impact

## Citations

- [6] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [7] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [8] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [9] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external

