Reliance Industries (BOM:500325)

QUOTE AND NEWS
The Economic Times  May 18  Comment 
Cook, who was accompanied by Apple India head Sanjay Kaul, also met Anant Ambani, the son of Reliance Industries Chairman Mukesh Ambani.
The Economic Times  May 17  Comment 
Buy Reliance Industries with a target of Rs 1020 and a stop loss of Rs 961
The Economic Times  May 12  Comment 
The stock has hit a high of Rs 986.45 and low of Rs 975.70 in trade so far
The Economic Times  May 10  Comment 
Even as Reliance Industries doesn't intend to offer doles on its 4G handsets under the "LYF" brand, some concessions are certainly expected.
The Economic Times  May 7  Comment 
The latest offer from Reliance Industries where each employee can invite 10 friends to sign up for Jio 4G services will propel usage and hype ahead of the commercial launch that is expected sometime this year, a leading investment group and...
The Economic Times  May 5  Comment 
He said he expects the Reliance Industries unit to make a “forceful launch”, but show “semblance of rationality” in pricing its services.
The Hindu Business Line  May 5  Comment 
Reliance Jio has started asking its employees to refer potential subscribers for its 4G telecom services. The Mukesh Ambani-backed firm had earlier allowed employees of Reliance Industries to try ...
The Economic Times  May 4  Comment 
The stock has slipped 3.22 per cent so far in the calendar year 2016. The stock is looking bullish on the charts.
The Economic Times  May 2  Comment 
Government will not succumb to any pressure in resolving pending arbitration disputes with companies such as Reliance Industries over KG-D6 gas fields, Oil Minister Dharmendra Pradhan.
The Economic Times  Apr 26  Comment 
Star Cotspin will be the first company in North India to be certified under the Recron SHT Branding Program.





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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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