Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Economic Times  Mar 28  Comment 
Sell Reliance Industries Ltd. at a price target of Rs 860.0 and a stop loss at Rs 908 from entry point.
The Economic Times  Mar 27  Comment 
The sale includes Reliance's interest in assets in the Eagle Ford shale. The US-based Pioneer Natural Resources Co, which was a partner in the asset, also exited the blocks.
The Economic Times  Mar 27  Comment 
Buy Reliance Industries Ltd. at a price target of Rs 946.0 and a stop loss at Rs 884 from entry point.
The Hindu Business Line  Mar 18  Comment 
The combined market valuation of six of the top-10 most valued companies declined by over Rs 52,000 crore last week, with IT major TCS taking the steepest hit. Reliance Industries Ltd (RIL),
The Hindu Business Line  Mar 16  Comment 
India will be a leader in 4G in 2019, says Reliance Industries CMD
The Economic Times  Mar 13  Comment 
The e-Residency programme to offer startups access to a govt-issued digital ID, thereby, enabling a global EU company to work from anywhere in the world.
The Economic Times  Mar 7  Comment 
Oil explorer Reliance Industries and lenders such as ICICI Bank and SBI weighed heavy.
The Economic Times  Feb 28  Comment 
MA is one of the three fields currently producing in RIL-BP's KG block and the only one that produces both oil and gas. D1 and D2 are the other two fields producing only gas.
The Hindu Business Line  Feb 26  Comment 
The Directorate General of Hydrocarbons has approved three field development plans involving investment of about $4 billion in KG-D6 block. Reliance Industries owns 60 per cent of KG-DWN-98/3, whil
The Economic Times  Feb 26  Comment 
Buy Reliance Industries Ltd. at a price target of Rs 967.0 and a stop loss at Rs 919 from entry point.





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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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