Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Hindu Business Line  Jul 23  Comment 
The Ministry of Petroleum and Natural Gas confirmed that former Australian Judge Micheal McHugh has quit as the Chairman of an arbitration tribunal in the case between Reliance Industries L...
New York Times  Jul 23  Comment 
Though Mukesh Ambani’s Reliance Industries is richer than ever, a penalty for failing to meet natural gas production levels has roiled the waters.
Reuters  Jul 21  Comment 
The BSE Sensex rose for a fifth consecutive session on Monday as Reliance Industries rallied after its quarterly earnings beat estimates, while merger-related news led to gains in some companies such Kotak Mahindra Bank.
The Hindu Business Line  Jul 21  Comment 
Reliance Industries spurted up nearly 3 per cent in morning trade on Monday, buoyed by its robust first-quarter numbers released on Saturday. At 11.25 am the stock was trading at ₹1,002.65, up 2.6...
The Hindu Business Line  Jul 21  Comment 
Reliance Industries shares reacted positively to the news of its first quarter results released late on Saturday. Shortly before 11 a.m., the stock was trading at ₹1,002, up ₹25.30 or 2....
Reuters  Jul 21  Comment 
Shares in Reliance Industries Ltd rise, after its June-quarter earnings beat estimates. RIL was trading up 2.7 percent to 1002.65 rupees as of 10:27 a.m.
The Hindu Business Line  Jul 20  Comment 
Retailing too pitches in
The Economic Times  Jul 20  Comment 
Foreign investors have hiked their stake in corporate behemoth Reliance Industries (RIL) to a seven-year high of about 20 per cent.
The Times of India  Jul 20  Comment 
Mukesh Ambani led Reliance Industries (RIL) on Saturday reported a 5.5% growth in net profit to Rs 5,649 crore on a standalone basis for the quarter ended June 30 (Q1FY15).
Wall Street Journal  Jul 19  Comment 
Reliance Industries Ltd. said its net profit for the three months ended June 30 rose 13.7% from a year earlier, boosted by growth in its refining and oil and gas business.





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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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