Inside Reliance’s Retail Slowdown: A Multibillion-Dollar Challenge for India’s Corporate Giant 

Reliance Industries faces significant challenges as its crucial retail business, which represents about half of the company’s valuation, experiences a sharp growth slowdown, with revenue increasing only 8.1% and EBITDA a mere 2% in the December quarter—far below its targeted 20%+ CAGR.

This retail deceleration, attributed to uneven post-festive demand, intense sector competition, and structural changes, has led major brokerages like Macquarie, Citi, and UBS to cut earnings estimates and stock target prices, triggering a 5% share drop. Although the company’s telecom segment reported steady growth and its oil-to-chemicals business weathered reduced imports of cheap Russian crude due to U.S. sanctions, the retail weakness has become the dominant concern for investors, overshadowing resilience in other verticals and raising questions about Reliance’s near-term consumer growth trajectory.

Inside Reliance’s Retail Slowdown: A Multibillion-Dollar Challenge for India’s Corporate Giant 

The Growth Engine Sputters 

Reliance Industries, India’s most valuable company, recently reported financial results that revealed a surprising vulnerability. While the conglomerate’s overall revenue grew by a robust 10% year-on-year to approximately ₹2.94 lakh crore, one of its most critical future growth engines showed significant signs of strain. Reliance Retail, the group’s third-largest business vertical and a key pillar in its consumer-facing empire, delivered revenue growth of just 8.1% and an EBITDA improvement of merely 2% during the December quarter. 

This retail slowdown represents more than a temporary blip—it has triggered substantial concern among analysts and investors, leading to earnings estimate revisions and target price cuts from major brokerages despite maintained buy ratings. The market reaction was swift and severe: Reliance shares experienced their worst single-day drop since June 2024, falling 4.5% and erasing over $10 billion in market capitalization. 

Decoding the Retail Slowdown 

The modest retail performance becomes particularly striking when compared against Reliance’s ambitious targets. During the company’s annual meeting last year, Isha Ambani, who heads the retail business, confidently projected the company’s ability to deliver “20%+ plus CAGR in retail revenues over the next three years“. The recent quarterly results, showing less than half that growth rate, have raised legitimate questions about this trajectory. 

Several interconnected factors explain this retail deceleration: 

• Festival Season Timing: Management noted that festive season demand in 2025 was split across the second and third quarters rather than concentrated in Q3, which distorted year-over-year comparisons. 

• Structural Changes: The company highlighted that its consumer staples business was demerged and now operates as a direct subsidiary of Reliance Industries, making year-on-year comparisons less straightforward. This segment contributed approximately ₹50.65 billion (about 5% of total retail revenue) in the December quarter. 

• Macroeconomic Environment: Despite government efforts to spur consumption through GST rate cuts in September, the demand recovery has been uneven across sectors. Bernstein analysts captured the prevailing sentiment, noting: “We don’t see any incremental near-term catalyst for consumer demand and go into 2026 with somber expectations”. 

Key Financial Performance Metrics 

The Competitive Landscape Intensifies 

Reliance Retail’s challenges cannot be viewed in isolation. The broader Indian retail sector is experiencing a significant transformation marked by intensifying competition and shifting consumer behaviors. According to Karan Taurani of Elara Securities, India’s retail environment has become increasingly challenging, with even established players facing growth moderation. 

• Fashion Sector Pressure: Trent Ltd., a key competitor in the value fashion segment, reported a concerning 15% decline in average revenue per square foot of store space in the December quarter. This indicates sector-wide challenges rather than company-specific issues. 

• Market Share Erosion: Citigroup highlighted that “intense competition in the sector was eroding incumbents’ market share,” suggesting that Reliance Retail faces formidable challenges from both established competitors and new market entrants. 

• Structural Digital Shifts: For retailers like DMart, rapid expansion of quick commerce and online grocery platforms has contributed to slowing like-for-like growth to around 5%, highlighting how digital disruption affects even the better-placed traditional retailers. 

The contrast between segments is telling. While fashion retailers face particular headwinds, other consumer segments show more resilience. Nykaa continues to post strong growth exceeding 25% in beauty and personal care, aided by limited competition in online BPC. Similarly, Jubilant FoodWorks demonstrates stable performance within the QSR segment. 

Geopolitical Crosswinds: The Russian Oil Dilemma 

While retail challenges dominate recent headlines, Reliance faces simultaneous pressure from geopolitical developments affecting its traditional energy business. The company has been one of the largest consumers of Russian crude oil, which at its peak accounted for 40%-45% of its crude mix. Recent U.S. sanctions on Russian firms Rosneft and Lukoil—one of which reportedly had a long-term supply contract with Reliance—have forced the company to dramatically reduce these imports. 

The data reveals the scale of this reduction: India’s imports of Russian hydrocarbons fell to €2.3 billion in December 2025 from €3.3 billion in November, with Reliance’s Jamnagar refinery halving its Russian crude intake. This decline caused India to slip to third place among buyers of Russian fossil fuels, behind China and Turkey. 

The EU’s new sanctions on products made from Russian crude, effective January 21, create additional complexities. Reliance’s massive Jamnagar refinery—the largest in the world at 1.4 million barrels per day—has been at the center of these sanctions. The company publicly stated that its export-facing segment would receive no more Russian crude “from 20 November,” meaning none of the refinery’s product exports would be made from Russian crude from December 1. 

Despite these challenges, Reliance’s energy business demonstrated resilience. The oil-to-chemicals (O2C) segment, which includes refining and petrochemicals, saw its EBITDA rise 15% year-on-year. As Goldman Sachs noted, “refining cracks [margins] strength more than offset lower Russian crude intake, higher freight rates and petchem weakness”. 

Diverging Business Fortunes 

The retail slowdown stands in stark contrast to the performance of Reliance’s other major business segments: 

• Digital Services Excellence: Jio continues its impressive trajectory with revenue growth of 12.7% and EBITDA expansion of 16.4%. The telecom giant added 8.9 million customers in the quarter, reaching a total subscriber base of 515 million, with its 5G subscriber count surpassing 250 million. 

• Energy Resilience: Despite geopolitical headwinds, the O2C business benefited from favorable refining margins. The segment’s performance highlights Reliance’s ability to navigate complex global energy markets even when specific advantages (like discounted Russian crude) diminish. 

• New Energy Ambitions: The company remains committed to its transition initiatives, with plans to commission a “10 gigawatt peak annual solar manufacturing gigafactory” and expand to 20 gigawatts. During its earnings call, the company denied reports of delays in its 40GW battery storage plant, stating it was “fast progressing” with commissioning expected over the “next few quarters”. 

Analyst Reactions and Market Implications 

The investment community has responded to these mixed results with measured concern. Major brokerages have adjusted their outlooks: 

• Macquarie Capital removed Reliance from its Asia Marquee list, noting that Reliance Retail “is a key swing factor” in the group’s sum-of-the-parts valuation due to its slowing growth momentum. 

• Citi cut its target price to ₹1,815 per share from ₹1,860 while UBS lowered its target to ₹1,790 from ₹1,820. 

• Citi further pared its estimates for Reliance’s consolidated EBITDA from financial year 2026 to 2028 by 1%-2%, citing “moderation” in the retail business. 

This analytical perspective reflects a recognition that Reliance’s retail business represents approximately half of the company’s total valuation according to some estimates, with ICICI Securities valuing the retail unit at over $103 billion in October—about half of Reliance’s then $226 billion market value. 

Analyst Reactions Summary 

Navigating the Path Forward 

Reliance Industries stands at a complex juncture. The company’s traditional strengths in energy and telecommunications continue to deliver solid performance, but its future growth engine—the retail business—faces unexpected headwinds. Several strategic considerations emerge: 

• Operational Adjustments: Reliance may need to recalibrate its retail expansion strategy, potentially focusing on profitability over sheer growth in the near term. The company added 431 stores in the quarter, taking its total network to nearly 20,000 outlets, but may need to optimize this footprint. 

• Digital Integration: With JioMart expanding to more than 5,000 pin codes and average daily orders rising 53% quarter-on-quarter, the omnichannel strategy presents opportunities to reinvigorate growth despite broader sector challenges. 

• Portfolio Rebalancing: The contrasting fortunes of different business segments may prompt a reassessment of capital allocation. With the digital services business poised for a potential IPO and continuing strong performance, resources might shift toward these higher-growth areas. 

• Geopolitical Navigation: The energy business must continue adapting to the evolving sanctions landscape while maintaining refining efficiency—a challenge it has thus far managed successfully. 

The coming quarters will reveal whether Reliance Retail’s slowdown represents a temporary adjustment or a more fundamental recalibration of growth expectations. As India’s consumption story continues to evolve amidst global uncertainties and competitive pressures, Reliance’s ability to adapt its retail strategy while maintaining momentum in its other verticals will determine whether the company can sustain its market leadership and deliver on its ambitious growth promises. 

What remains clear is that even corporate giants are not immune to sectoral shifts and global headwinds. Reliance’s response to these dual challenges—in retail and energy—will offer valuable insights into how diversified conglomerates navigate an increasingly complex business environment where geopolitical, competitive, and macroeconomic factors converge to reshape even the most carefully laid growth strategies.