Reliance Industries reported a mixed Q4 FY26 with revenue growing a strong 14.2% year-on-year to ₹2,98,621 crore — its highest-ever quarterly revenue — while net profit declined 8.8% year-on-year to ₹20,616 crore and EBITDA margin compressed sharply to 15% from 16.76% year-on-year and 17.37% sequentially. The margin compression is the most significant operational concern in an otherwise strong top-line quarter, and the 5G depreciation cycle running through Jio’s books is the primary structural explanation — with annual cash flow from operations hitting ₹1.92 lakh crore, telling a very different story from the reported PAT.
Q4 FY26 Headline Numbers
Revenue of ₹2,98,621 crore was up 14.2% year-on-year and 12.7% sequentially — crossing close to ₹3 lakh crore in a single quarter for the first time, a scale milestone for India’s largest company. EBITDA of ₹44,141 crore grew just 0.7% year-on-year and fell 4.1% sequentially. PAT of ₹20,616 crore declined 8.8% year-on-year and 7.5% sequentially from ₹18,645 crore in Q3 FY26. Balance sheet rated Strong.
The Margin Story — The Key Concern of This Quarter
EBITDA margin of 15% in Q4 FY26 against 16.76% in Q4 FY25 and 17.37% in Q3 FY26 is the number that will define most of the post-results conversation. The margin compression is severe — 176 basis points year-on-year and 237 basis points sequentially — representing the most meaningful margin deterioration RIL has reported in several quarters.
The gap between 14.2% revenue growth and 0.7% EBITDA growth producing a 176 basis point year-on-year margin compression reveals that costs are growing significantly faster than revenue across the consolidated business. Three factors explain this.
The first is O2C — Reliance’s Oil-to-Chemicals segment, which remains the largest revenue contributor, has been operating in a difficult global refining margin environment through Q4 FY26 as elevated crude costs from the Iran war have compressed gross refining margins even as throughput volumes have been maintained. The gap between crude costs and product realisations has narrowed, reducing O2C’s EBITDA contribution.
The second is Jio depreciation. The 5G network rollout’s depreciation charge is embedded in the EBITDA-to-PAT bridge and flows through EBITDA at the segment level through amortisation of spectrum and depreciation of 5G radio access network equipment. This creates a situation where Jio’s revenue is growing strongly but its EBITDA margin is being held back by the infrastructure cost absorption of the largest telecom capex cycle in Indian history.
The third is Retail’s competitive environment. Jio Mart and the broader retail business are operating in an intensely competitive landscape where pricing pressure from quick commerce, D2C brands and the Amazon-Flipkart ecosystem limits the ability to pass cost increases to consumers.
The 15% vs 17.37% Margin Gap — Sequential Context
The sequential compression from 17.37% in Q3 FY26 to 15% in Q4 FY26 — a 237 basis point decline in a single quarter — is unusually sharp and will attract specific analyst questions. Sequential margin compression of this magnitude in a quarter where revenue grew 12.7% typically indicates either a significant one-time cost item, an acceleration in depreciation charges from newly commissioned assets, or a sudden deterioration in the highest-margin segment’s performance.
Given the Iran war crude price spike — Brent touching $106 per barrel through much of Q4 — the O2C segment’s sequential margin is the most likely primary cause. Higher crude costs hit RIL’s refinery costs before they are reflected in product prices, creating a lag that compresses O2C EBITDA in the quarter the crude spike occurs.
The Cash Flow Offset — Why PAT Understates the Business
The critical context for RIL’s Q4 FY26 reported numbers is the annual CFO of ₹1.92 lakh crore — cash flow from operations for the full financial year. This figure diverges dramatically from the PAT trajectory because depreciation is a non-cash charge. The 5G network Jio has built — one of the most extensive and fastest-deployed 5G infrastructures in the world — is now being depreciated through the P&L, reducing reported profit without reducing cash generation.
For investors focused on economic value rather than accounting profit, RIL’s operating cash generation of ₹1.92 lakh crore annually — growing as Jio’s 5G revenues accelerate — is the relevant measure of the business’s earning power. The PAT will recover as the 5G depreciation cycle peaks and moderates, and the cash flow will remain strong throughout.
Full Year FY26 — The Stronger Picture
FY26 revenue of ₹10,75,675 crore — the first time RIL has crossed ₹10 lakh crore in annual revenue — grew 11.7% year-on-year. Full year EBITDA of ₹1,78,949 crore grew 8.1%. Full year PAT of ₹95,610 crore grew 17.6% year-on-year — a number that reflects the full year average margin position rather than Q4’s compressed quarter and confirms that the underlying annual earnings trajectory remains healthy despite the Q4 weakness.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers are advised to consult a SEBI-registered financial advisor before making investment decisions.