Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Economic Times  Mar 17  Comment 
Sell Reliance Industries Ltd. at a price target of Rs 1260 and a stop loss at Rs 1320 from entry point
The Times of India  Mar 15  Comment 
In the second major shareholding rejig within a week by Reliance Industries' promoters, three of them transferred over 38.87 crore shares today to two others in transactions worth nearly Rs 50,000 crore.
The Economic Times  Mar 15  Comment 
HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC's portfolio, making it the third-largest refiner in the country after IOC and Reliance Industries.
The Economic Times  Mar 15  Comment 
According to a Bloomberg report, 38.87 crore shares changed hands on the counter on BSE. The buyers and sellers were not immediately known.
The Economic Times  Mar 10  Comment 
A total of 404 million shares were traded on the NSE and BSE combined, and RIL's market capitalisation stood at Rs 4.19 lakh crore.
The Economic Times  Mar 9  Comment 
Experts say the recent internal transfer of promoter shares in Reliance Industries could be largely due to the changes in tax regime in the budget.
The Hindu Business Line  Mar 9  Comment 
Reliance Industries executed a block deal of Rs 50,000 crore in value on the BSE today, according to a source close to the exchange. Trading volumes in the stock spurted 367 times today as a result. ...
The Economic Times  Mar 7  Comment 
Reliance Industries is most likely to outperform the benchmark indices this year and bring an end to the underperformance seen of the last eight years.
The Hindu Business Line  Mar 6  Comment 
Gap between the company and TCS narrowing down
The Economic Times  Mar 5  Comment 
Reliance Industries again put up a stellar performance for the week, as the stock crossed a seven-year high Rs 1,287 and ended at Rs 1,258 after Reliance Jio’s first analyst meet.





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Business Profile

Reliance Industries (RIL), established in 1966, is the flagship company of the Reliance group. The company started with textiles and thereafter backward vertical integrated in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production.

RIL is a leading producer of polyester yarn and fiber producer and amongst the major producers of petrochemical products in the world.

The company`s operations can be classified into three segments that of petroleum refining and marketing business, petrochemicals business and others (including crude oil and natural gas exploration and production business)

Presently, the company`s activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles and retail.

Some of RIL`s group companies include Reliance Petroleum (RPL), Reliance Retail, Indian Petrochemicals Corporation (IPCL) and Reliance Industrial Infrastructure.

RIL has manufacturing facilities at Naroda, Patalganga, Hazira and Jamnagar.


RIL has rallied 16% over last month even as refining margins have fallen. Lower-thananticipated margins present the biggest risk to our estimates and valuation. We maintain our Rs1,850 target price and downgrade the stock from Hold to Sell.

Refining looking shaky Singapore complex refining margins have averaged US$4.6/bbl to date in 2QFY09, according to Reuters, compared to US$8.2/bbl in 1QFY09 and US$6.4/bbl in 2QFY08. Gasoline margins have been weak even in the traditionally strong April-July period as US demand has declined. Given US car manufacturers are replacing their truck plants with small car plants, this decline could be structural rather than cyclical. Middle distillate (diesel/jet fuel) margins have been very strong (US$30/bbl+) since March 2008, but have dropped by US$10/bbl in August. Basically, demand growth appears to be slowing down just as new refining capacity is set come on stream. We believe the refining cycle will turn down from FY09 and forecast RIL GRMs will decline from US$15/bbl in FY08 to US$12.5/bbl in FY10. But, just as the upside in GRMs over last three years was under-estimated by the market (RIL GRM in FY04 was US$6.4/bbl), it is possible the downside will also end up looking worse.

Upsides all in E&P We have assumed that RIL will sell 40mmscmd of gas to RNRL/NTPC for the next 17 years at the disputed contract price (US$2.6mmbtu), however litigation on this issue is continuing. If there were no such liability, our FY10 and FY11 EPS estimates would rise to Rs206 and Rs192 respectively and our valuation could increase to Rs2,000, assuming no other changes. There is potential for surprises in terms of large new discoveries. However, our valuation is based on a gross reserve estimate of 7.7bn boe by March 2009, compared to RIL's disclosed 2P reserve estimate of 4.4bn boe.

Downgraded to Sell, target price Rs1,850 We maintain our EPS estimates and our SOTP-based target price, which values RIL as of end- FY09 (post conversion of promoter warrants). Our estimates factor in no government policy risks from any imposition of minimum alternate tax (MAT) on Reliance Petroleum, loss of tax holiday for gas production or any export tax on refined products.

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