Reliance Q2 Shareholding Analysis: FPIs Exit, Domestic Gainers 2025

Reliance Industries Ltd (RIL) experienced a significant shift in its Q2 FY26 shareholding pattern, with Foreign Portfolio Investors (FPIs) reducing their stake while Domestic Institutional Investors and retail participants increased theirs. This divergence highlights varying global and local capital sentiments towards the Indian conglomerate.

This reallocation is crucial, signaling potential changes in confidence and investment strategies across different investor classes in the Indian market.

As of market close October 25, 2025, RIL’s share price closed marginally higher at ₹1,451, following a reported 10% year-on-year growth in consolidated Q2 net profit to ₹18,165 crore.

Here’s what investors need to know about this development.

The Q2 FY26 shareholding shift at Reliance Industries Ltd (RIL) reflects a notable divergence in investor sentiment, with domestic entities like mutual funds and LIC bolstering their stakes while foreign portfolio investors (FPIs) trimmed theirs. This trend is consistent with broader patterns observed in the Indian market over the past year, where domestic institutions have actively supported large-cap stocks amidst global economic uncertainties. The Nifty 50, for instance, has seen consistent inflows from domestic players, contributing to its resilience. While RIL’s FPI holding decreased from 18.70% to 18.17%, the increase in mutual fund holdings to 9.50% from 9.14% highlights sustained confidence in the company’s long-term prospects. This uptick in domestic participation is a positive indicator, suggesting a deeper understanding of RIL’s diversified business model and its ability to navigate various market cycles. This performance comes after a challenging Q1 FY26, where global headwinds had led to a slight dip in FPI interest, making this domestic affirmation particularly significant. Covering Indian equity markets for over a decade, I’ve observed that such domestic accumulation often precedes a stable growth phase.

From a fundamental perspective, RIL’s Q2 FY26 results provide strong backing for this increased domestic interest. The company reported a robust 10% year-on-year growth in consolidated net profit to ₹18,165 crore, alongside a comparable revenue growth to ₹2.59 lakh crore and an 80 basis points improvement in EBITDA margins. While sequential profit showed a dip, this is largely attributable to seasonal factors and does not diminish the impressive year-on-year performance. The stock’s recent performance, with a 6% gain in the past month and nearly 20% year-to-date, underscores market appreciation for its operational efficiencies and growth trajectory. RIL’s strategic focus on new energy and its dominant positions in telecom (Jio Platforms) and retail sectors are key drivers of its sustained value proposition, as evidenced by increasing free cash flow generation and expanding operating leverage. The strong EBITDA margin expansion to 25.2% from 24.4% in Q1 FY26 is particularly noteworthy, indicating enhanced profitability and operational leverage.

In comparison to its peers, RIL’s conglomerate structure offers a unique advantage. While direct metric comparisons with pure-play companies are challenging, the consistent accumulation by LIC (to 6.81%) and a marginal rise in retail investor stakes (to 6.95%) suggest a broad-based conviction in RIL’s value. Companies like Tata Motors have seen different investor dynamics, while Adani Enterprises has experienced higher volatility. RIL’s diversified revenue streams act as a hedge against sector-specific downturns. The positive EBITDA growth and improving margins across its segments, including petrochemicals and digital services, indicate strong operational execution and pricing power, especially in the face of global macroeconomic headwinds and evolving regulatory landscapes in the telecom sector. For instance, Jio Platforms reported a 15% YoY growth in EBITDA, outpacing the sector average, a trend not consistently seen in competitors like Vodafone Idea.

For retail investors, the growing domestic institutional interest in RIL offers a signal of underlying strength and potential for sustained capital appreciation. While monitoring FPI flows remains important, the robust domestic demand provides a strong support base. Key opportunities lie in RIL’s aggressive expansion in the new energy sector, its continued digital transformation initiatives in telecom and retail, and potential value unlocking from demergers. However, investors must remain cognizant of risks, including potential regulatory changes, global economic slowdowns impacting petrochemical demand, and intensified competition in its core businesses. Current valuations appear reasonable, especially considering the long-term growth runway and consistent financial performance. Key events to watch include the company’s progress on its new energy ventures and regulatory developments impacting its telecom arm. Analysts maintain a consensus target price of ₹1,950, suggesting a potential upside of approximately 30% from current levels, which is a compelling outlook for long-term holders.

Related Topics:

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