Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Hindu Business Line  Sep 25  Comment 
Reliance Jio Infocomm Ltd has signed a $750-million loan backed by Korea Exim Bank. The loan is guaranteed by Reliance Industries Ltd and will be primarily used to finance goods and servic...
The Economic Times  Sep 25  Comment 
Ambani, who announced that Reliance Industries would create 1.25 lakh jobs in the 12-15 months, said it was important for villages to stay connected.
The Economic Times  Sep 24  Comment 
Reliance Industries Ltd is raising $800 million from Korea Exim in order to finance purchase of telecom equipment from Korean vendors.
The Hindu Business Line  Sep 19  Comment 
Bharat Petroleum Corporation is confident of holding its own in the fuel retailing arena once private players like Reliance Industries make a comeback. “We are fully geared to meet future...
The Economic Times  Sep 9  Comment 
"Reliance Industries Ltd is a 'BUY' call with a target of Rs 1065 and a stop loss of Rs 1024."
The Economic Times  Sep 8  Comment 
Reliance Industries, ONGC and BPCL walked away with the top honours at the annual PetroFed Oil & Gas Industry Awards here today.
The Hindu Business Line  Sep 4  Comment 
A partnership between Reliance Ventures Ltd (RVL), a wholly-owned subsidiary of Reliance Industries Ltd (RIL) and Infrastructure Leasing and Finance Services (IL&FS) to co-promote a model econ...
The Hindu Business Line  Aug 31  Comment 
Reliance Industries today said it has returned nearly 1,384 acres of land in Gurgaon that was acquired for its SEZ, saying that the withdrawal of the concessions offered to special economic zones...
The Hindu Business Line  Aug 30  Comment 
Mukesh Ambani, the world’s richest energy billionaire and head of Reliance Industries, has dropped out of a business delegation accompanying Prime Minister Narendra Modi on his visit to Japan....
The Hindu Business Line  Aug 28  Comment 
Designed to popularise the game in India and put the country on the football map, Reliance Industries Ltd along with IMG Worldwide and Star India, have come together to launch a football champions...





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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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