Reliance Industries (BOM:500325)

The Hindu Business Line  Apr 18  Comment 
After a gap of four years, Reliance Industries pipped Tata Consultancy Services to become India’s most valued company on an intra-day basis with a market capitalisation of over Rs 4.58 lakh crore at ...
The Economic Times  Apr 18  Comment 
The company's m-cap hit over Rs 4,57,700 crore, which helped it steal the top slot on D-St.
The Economic Times  Apr 5  Comment 
The market capitalisation (m-cap) of Reliance Industries stood at Rs 4.56 lakh crore was a few crores away from its all-time high m-cap of Rs 4,67,537 crore.
The Hindu Business Line  Apr 3  Comment 
Shares of Reliance Industries hit near 9-year high as Jio subscriptions cheered investors. Reliance stock rose as much as 4.5 per cent to Rs 1,380.50, its highest since May 2008. The stock was ...
The Economic Times  Apr 3  Comment 
The scrip was trading 4.20% up at Rs 1,374.60 around 9.50 am (IST) on Monday.
The Hindu Business Line  Mar 31  Comment 
Shares of Reliance Industries will remain in focus, as its telecom unit Jio Infocomm is set to charge for its services from April 1. Expectations are that a majority of its users will stay on even af...
The Hindu Business Line  Mar 28  Comment 
Reliance Industries on Tuesday said the Securities and Exchange Board of India’s conclusions in the order barring the company from trading in equity derivatives were based on “surmises, conjectures ...
The Economic Times  Mar 27  Comment 
Reliance Industries also reiterated to file an appeal against the Sebi order in the Reliance Petroleum case before the Securities Appellate Tribunal.
The Hindu Business Line  Mar 27  Comment 
The Economic Times  Mar 27  Comment 
The stock declined 1.62 per cent to hit a low of Rs 1265.35 on BSE.
The Hindu Business Line  Mar 26  Comment 
After 10 years of investigations and a few back-and-forth arguments, market regulator SEBI, under its new chief Ajay Tyagi, has found Reliance Industries Ltd (RIL) guilty of unfair trade practices an...

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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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