Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Hindu Business Line  3 hrs ago  Comment 
Mukesh Ambani’s Reliance Industries wants to raise another ₹25,000 crore by private placement of non-convertible debentures, according to a disclosure the company made to stock exchanges on Monday. T...
The Hindu Business Line  5 hrs ago  Comment 
Reliance ushers corporate democracy Reliance Industries has announced the issue of bonus shares in the ratio of one equity share for every share held. The ratio was announced by the Chairman, Mr. D...
The Economic Times  7 hrs ago  Comment 
The special resolution is listed on the agenda of 40th Annual General Meeting of the company on July 21, 2017, Reliance Industries Ltd said in BSE filing.
The Economic Times  Jun 25  Comment 
It expects that investment along with the fledgling telecom venture, into which RIL has pumped in over Rs 1.3 trillion so far, will contribute 50 per cent increase in operating income.
The Hindu Business Line  Jun 23  Comment 
Reliance Industries Limited and BP have withdrawn the gas price arbitration with the Indian government. In an emailed response to BusinessLine, BP said, "Yes. The Gas Price Arbitration has alrea...
The Economic Times  Jun 22  Comment 
The govt announced a new policy that allows gas from fields in difficult terrains like deep-sea regions to be sold at almost double the price allowed for normal fields.
The Economic Times  Jun 21  Comment 
Jio’s net loss for the six months ended March widened to Rs 22.50 crore from Rs 7.46 crore a year earlier, according to the first set of financial numbers.
The Economic Times  Jun 21  Comment 
Most active stocks in terms of value help investors to identify the stocks with the highest trading turnover during the day.
The Hindu Business Line  Jun 20  Comment 
Reliance Industries’ planned $6-billion investment to monetise gas finds in the KG-D6 block will increase its exposure to the extremely challenging Indian gas business that is fraught with delays and...
The Economic Times  Jun 19  Comment 
Buy Reliance Industries Ltd. at a price target of Rs 1550.





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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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