Reliance’s O2C Business Posts 30% Revenue Jump to Rs 2.02 Lakh Crore in Q1 FY27 as Hormuz Closure Lifts Crude Prices
Reliance Industries Ltd’s oil-to-chemicals (O2C) business reported a 30.4 percent year-on-year rise in revenue to Rs 2.02 lakh crore in the first quarter of FY27. Segment EBITDA grew 17.2 percent to Rs 17,010 crore. The company attributed the topline growth to a steep rise in crude oil prices, which was partly offset by lower production during a planned turnaround.
Crude Prices Climb on Strait of Hormuz Closure
Dated Brent averaged $104.5 per barrel during the quarter, up $36.7 per barrel from a year earlier. Reliance said the closure of the Strait of Hormuz disrupted an estimated 13 million barrels per day of crude supplies and tightened global oil markets.
What Drove the EBITDA Growth?
The company said the EBITDA gain came mainly from a sharp increase in transportation fuel cracks and stronger downstream margins. Three operational factors also supported the segment’s performance:
- Diversification of the crude basket
- Efficient placement of products in deficit markets
- Favourable economics in ethane cracking
Headwinds That Limited Margin Capture
Reliance said several pressures kept it from capturing the full benefit of the price rally. Physical crude barrels carried high premiums, and freight and insurance costs rose.
The company also acted to shield Indian consumers from the West Asia conflict. It diverted propane and butane to raise LPG output and held fuel prices steady at its retail outlets. This led to under-recoveries in fuel retailing.
The company also pointed to the reintroduction of the Special Additional Excise Duty (SAED) on diesel, motor spirit and aviation turbine fuel as a factor that hurt margins.
Why It Matters?
EBITDA grew at roughly half the pace of revenue (17.2 percent against 30.4 percent). That suggests a good part of the revenue gain came from higher crude prices rather than from stronger underlying margins. For investors, the key question in the coming quarters is how long the supply disruption lasts and how much of the retail price burden Reliance will absorb.
