Reliance Industries Ltd. share price target

Reliance JIO net profit largely flat q-o-q: Reliance JIO (RJIO Digital Services business) reported EBITDA margin of 37.8% (EBITDA of Rs. 2,694 crore) and PAT of Rs. 510 crore in Q4FY2018, which was largely flat on a sequential basis. Average revenue per user (ARPU) declined by 11% q-o-q to Rs. 137.1, but subscriber addition continued to remain robust...

RIL is the largest private player in the refining, petrochemical and E&P; sectors in India. While RIL's refining complex in Jamnagar is the largest in the world...

As we had pointed out in our earlier report, Latin Touch, November 2017, structurally poor utilization in Latin America and Africa would keep benchmark gross refining margins (GRMs) strong in the next 2-3 years. RIL should clock GRMs of USD11-12/bblin FY19-20. Petchem margins have also been strong. Though PE prices have been ~USD828/mt inFY18YTD, 5% below the five-year average, PP and PVC prices are 6-25% higher. We expect RIL's petchem EBITDA to increase by 67% during FY17-20. We expect strong free cash flow generation of INR678b during FY18-20 on consolidated basis.

RIL's standalone PAT came in at Rs 84.5 bn, 2/5% higher QoQ/YoY, on strong cyclical businesses and contribution from new projects. RJio turned PAT positive and reported EBITDA of Rs 26.3 bn (~38.2% margin) and 21.5 mn net subscriber additions.

Reliance Industries Limited (RIL) reported 25% increase in consolidated net profit to Rs 9423 crore in Q3FY'18 compared to Q3FY'17 which was higher than the estimates while net sales were up 22% to Rs 102500 crore. Increase in revenue is primarily on account of volume increase with start-up of petrochemicals projects and increase in prices in refining and petrochemical businesses. The increase in consolidated revenues reflects robust growth of 116% in Retail business and continued enhancement in Jio's wireless operations. Exports (including deemed exports) from India were higher by 21.3% at Rs 46,151 crore as against Rs 38,038 crore in the corresponding period of the previous year due to higher export of...

Our SOTP-based target for RIL is Rs 1,080/sh based on Dec-19 earnings (6.5x EV/e for standalone refining, 8x EV/e for petchem, Rs 19/sh for domestic E&P, 1x EV/invested capital for Shale/Retail and 1x investment in Telecom. Maintain BUY. 3QFY18 saw RIL yet again proving its operational mettle despite weak global GRMs. Q3 EBITDA came in at Rs 137bn (+29.6% YoY), on account of higher GRMs (USD11.6/bbl, +7.4% YoY, -3.3% QoQ), better Polyester margins and higher Polymer volumes (+20% YoY, +8% QoQ). PAT grew 5.4% YoY to Rs 84.5bn, impacted by lower other income, and higher depreciation and tax.

Q3FY18 result came better than our expectation led by robust performance from its Petrochemicals, Retail and Jio, offset by slight disappointment from refinery. Petchem reported highest ever volume of 8MMT (+7% QoQ) with best ever profit of...

Reliance Industries Ltd Q3FY18 results comment Revenue grew by 9.1% to Rs. 99810.0 Cr in Q3FY18 when compared to the previous quarter

RJio- the company's digital business- exhibited a strong performance, turning profitable (PAT of INR5b versus -INR2.7b in 2QFY18 and our estimate of -INR1.1b) in only its second quarter of commercial launch. This can be ascribed to its standalone revenue growth of 12% to INR68.8b (4% beat) and EBITDA growth of 82% to INR26.3b (30% beat). RJio recorded an EBITDA margin of 38.2% in its second quarter of commercial launch. This is 440bp higher than Bharti's India wireless EBITDA margin of 33.8% for 3QFY18 ??? even at two thirds revenue size compared to Bharti. RJio's ARPU declined by a meager 1% to INR154; this is despite (our estimate) of 2QFY18 revenue also including ~13% of 1QFY18 revenue. RJio's subscriber base reached 160m, with 22m net adds and 27m gross adds ??? of which ~6m are Jio Phone additions.

stabilizing currently while remaining six in the SEZ unit would be ready by Q1FY19. Petchem segment earnings are resilient due to broader margin support from Chinese clampdown besides cost control and improved mix. Indian demand is likely to accelerate as the economy rebounds from de-mon and GST. Domestic upstream capex would start with R Series drilling from 2HCY18 while US shale drilling is also expected to restart with higher oil prices. First KG gas expected by 2HCY19. Management remains positive on retail business' prospects. The recent cut in Jio's tariff was in-line with Jio's principle to provide the most competitive...