Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Hindu Business Line  10 hrs ago  Comment 
Reliance Industries led the pack on the NSE as well on Thursday morning. At 11.10 am it was trading at Rs 932.25. This represented a gain of 2.8 per cent on its overnight close at Rs 906.85. ...
The Hindu Business Line  10 hrs ago  Comment 
Reliance surged into the lead on the BSE on Thursday morning. At 11 am it was the top gainer on the bourse, quoting at Rs 933.20 as against Rs 905.85 at close yesterday. This represented a gain of...
The Hindu Business Line  Jan 28  Comment 
Reliance Industries and its partner BP plc of UK will invest about Rs 6,000 crore by 2016 to help sustain and improve recovery from the two main gas fields in the eastern offshore KG-D6 block.
The Hindu Business Line  Jan 28  Comment 
Reliance Industries made rapid strides to emerge the top gainer on the BSE near the close on Wednesday. At 3.20 pm the share was trading at Rs 908. This represented a gain of 2.17 per cent on its...
The Hindu Business Line  Jan 22  Comment 
Reliance Industries’ $1-billion issue of senior unsecured notes was oversubscribed 4.5 times by over 272 accounts, a press release from the company said on Thursday. The notes were rated BB...
The Hindu Business Line  Jan 22  Comment 
The Times of India  Jan 21  Comment 
Reliance Industries has hit the international debt market with an aim to raise around &1 billion by selling bonds to international investors.
The Economic Times  Jan 21  Comment 
'Reliance Industries Ltd is a ‘BUY’ call with a target of Rs 936 and a stop loss of Rs 887.
The Times of India  Jan 19  Comment 
Tata Consultancy Services (TCS) posted a net profit of Rs 5,328 crore for the quarter ended December, overtaking long-standing champion Reliance Industries Ltd.
The Economic Times  Jan 19  Comment 
Shares of Reliance Industries today rose by over 1 per cent even as the company's December quarter net profit dipped by 4.5 per cent.
The Hindu Business Line  Jan 19  Comment 
Reliance Industries Ltd, which operates the world's largest refinery complex in Gujarat, has fallen 1.1 per cent. According to Reuters calculations, the company’s December-quarter consol...





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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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