Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Hindu Business Line  Aug 23  Comment 
RIL (₹907.3) Reliance Industries tumbled 6 per cent, decisively breaking a twin support, medium-term uptrend line and a key base level at around ₹940 in the previous week. Further...
The Hindu Business Line  Aug 21  Comment 
Reliance Industries Ltd (RIL) will leverage Reliance Jio’s pan-India telecom network and Reliance Retail’s online and offline business model for its payment bank services.  
The Hindu Business Line  Aug 20  Comment 
Reliance Industries has raised $225 million of debt from the Export-Import Bank of the US. The 10-year unsecured notes were issued at par and bear a fixed interest rate of 2.512 per cent...
The Economic Times  Aug 20  Comment 
In an employee engagement initiative, Mukesh Ambani-owned Reliance Industries has created two virtual employees named 'Shubh' and 'Labh'.
The Hindu Business Line  Aug 20  Comment 
Reliance Industries Ltd (RIL) today said it has raised $225 million (about Rs 1,468 crore) through overseas bond issue due in 2026, guaranteed by the Export-Import Bank of the United States.
The Hindu Business Line  Aug 19  Comment 
Shares of Aditya Birla Nuvo, Bharti Airtel, Cholamandalam Investment and Finance Company, Reliance Industries, Sun Pharmaceutical Industries and Tech Mahindra may react positively on getti...
The Economic Times  Aug 17  Comment 
Individual stocks such as Amara Raja could do well, but I do not see any big participation either from ICICI Bank or Reliance Industries.
The Hindu Business Line  Aug 16  Comment 
The stock of Reliance Industries gained 3.4 per cent with traded volumes higher than average on Friday. The stock recouped much of the loss it had made early in the week, to close 1.8 per cent dow...
The Hindu Business Line  Aug 3  Comment 
The Government has recovered ₹367.86 crore of additional profit petroleum it is claiming from the Reliance Industries operated KG-D6 field due to the penalty imposed for missing targets, Mi...
The Economic Times  Jul 29  Comment 
Chief human resources officer Prabir Jha put in place a five-day week, increased leave entitlements and sought to modernise performance management and appraisal processes.





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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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