Reliance Industries (BOM:500325)

QUOTE AND NEWS
Reuters  4 hrs ago  Comment 
Reuters Market Eye - Reliance Industries gains 3.1 percent.
The Economic Times  9 hrs ago  Comment 
Reliance Industries Ltd is a 'BUY' call with a target of Rs 905 and a stop loss of Rs 879.
The Economic Times  Dec 18  Comment 
"I guess leaving aside the gas side of the equation so the name like that is interesting but there are number of other bottom up names across a variety of sectors."
The Economic Times  Dec 15  Comment 
"Reliance Industries Ltd is a 'SELL' call with a target of Rs 800 and a stop loss of Rs 915."
The Economic Times  Dec 11  Comment 
Oil stocks, led by ONGC and Reliance Industries, tumbled up to 3.2 per cent at close today as global crude prices fell further.
Commodity Online  Dec 10  Comment 
As per the definitive agreements, RIL will transfer its existing textile business into a newly incorporated company ( and lsquo;JV and rsquo;), for which RIL will receive cash consideration.
The Hindu Business Line  Dec 9  Comment 
Reliance Industries Limited has formed a joint venture company with China’s Shandong Ruyi Science in a bid to revive its struggling textile business. RIL had started as a textile company under Dhi...
The Hindu Business Line  Dec 8  Comment 
Reliance Industries has selected 11 banks for a 144A/Reg S US dollar-denominated bond offering, which could hit the markets as early as tomorrow.ANZ, Bank of America Merrill Lynch, Barclays...
The Times of India  Dec 7  Comment 
The Central Information Commission has allowed Sebi to withhold the information on its probe into alleged short selling of shares by Reliance Industries Limited in 2007 saying investigation has not concluded yet.
The Hindu Business Line  Dec 5  Comment 
India's Reliance Industries has chartered a medium-range vessel to carry diesel from India to Singapore in December, a rare move for the refiner that typically uses larger vessels for the route, t...





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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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