Reliance Industries (BOM:500325)

The Hindu Business Line  11 hrs ago  Comment 
Reliance Industries’ consolidated net profit in the recent September quarter dipped 23 per cent Y-o-Y. This was primarily due to exceptional items pertaining to asset sales in the year-ago period....
The Hindu Business Line  Oct 21  Comment 
Shares of Reliance Industries today fell 2.5 per cent after the company reported 23 per cent decline in second quarter net profit. The stock, even after a positive opening, failed to hold on to the...
The Economic Times  Oct 21  Comment 
Reliance Industries announced operating profit before exceptional items of Rs 107.95 billion ($1.62 billion), a 36% jump from the year-earlier quarter.
The Economic Times  Oct 21  Comment 
However, global brokerages such as CLSA, BofA-ML and Goldman Sachs see up to 24 per cent upside in the stock over the next one year.
The Hindu Business Line  Oct 20  Comment 
Reliance Industries Ltd, on Thursday, posted an 18 per cent rise in standalone net profit at Rs. 7,704 crore for the quarter ended September 30, 2016 against Rs 6,534 crore in July-September 2015 qua...
The Economic Times  Oct 20  Comment 
Domestic equity indices are likely to trade on a positive note on Thursday, tracking an overnight rise in US stocks and crude oil prices, ahead of quarterly numbers from a dozen of domestic companies, including that of Reliance Industries,...
The Economic Times  Sep 30  Comment 
"Customers should pay for only one service, either voice or data. Not both," Reliance Industries Chairman Mukesh Ambani had said.
The Economic Times  Sep 29  Comment 
Buy Reliance Industries Ltd. at a price target of Rs 1120 and a stoploss at Rs 1070 from entry point

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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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