India’s largest company, Reliance, faces the biggest challenge at home

India’s largest business group, Reliance Industries, has been battling geopolitical headwinds in its oil refining and, reportedly, in one of its new energy ventures. But those are not the oil-to-telecom conglomerate’s biggest worries.

The slowdown in its retail business, the group’s third largest vertical, has had analysts reduce earnings estimates and cut stock target price, even as they maintain a buy rating on Reliance shares.

Reliance Retail’s revenue grew just 8.1% on year and its earnings before interest, taxes, depreciation, and amortization, or EBITDA, improved a mere 2% during the last quarter, raising doubts over its ability to deliver high growth.

“We are confident of delivering 20%+ plus CAGR [compound annual growth rate] in retail revenues over the next three years,” Isha Ambani, who heads the retail business, told shareholders at the company’s annual meeting last year.

Macquarie Capital has removed Reliance from its Asia Marquee list. Reliance Retail “is a key swing factor” in the group’s sum-of-the-parts valuation due to the slowdown in its growth momentum, the global brokerage said in a report on Monday.

Citi has cut its target price to 1,815 rupees ($19.9) per share from 1,860 rupees while UBS has lowered it to 1,790 rupees from 1,820 rupees. UBS was expecting the retail business to grow 10% on year in the December quarter.

Just ahead of the festive season, in September, the Indian government slashed goods and service tax rates in order to spur domestic consumption. But the pick up in demand has been uneven across segments with sales of gold and cars increasing in the December quarter while fashion and consumer staples reported softer growth.

“We don’t see any incremental near-term catalyst for consumer demand and go into 2026 with somber expectations. While we hope for a delayed impact of the stimulus measures, we expect only a gradual recovery at best, not a dramatic rebound,” Bernstein said in a note earlier this week.

Reliance Retail peers such as Avenue Supermarkets and Tata Group’s Trent have also reported slower growth in the December quarter. Reliance has said festive season demand last year was split across second and third quarters, resulting in softer growth numbers.

Reliance Retail has also argued that its December quarter results are not comparable year on year as its consumer staples business was demerged and now is a direct subsidy of Reliance Industries.

The gross revenue of consumer staples business was 50.65 billion rupees ($556.8 million) in the December quarter, or roughly 5% of Reliance Retail’s revenue of 976 billion rupee.

Brokerages do not see the December quarter results as blip in the company’s growth, but more of a secular downtrend. Citi on Monday pared its estimates for Reliance’s consolidated EBITDA, from financial year 2026 to…