Reliance Industries Ltd. share price target

Reliance Industries (RIL) achieved net sales of Rs 152149 crore, an increase of 4% as compared to Rs 146018 crore in the corresponding period of the previous year. Increase in revenue is primarily on account of robust growth in Retail & Digital Services businesses which grew by 27% and 43%, respectively. This was partially offset by decrease in Refining and Petrochemicals segment revenue with 17.7% fall in Brent crude price. Exports (including deemed exports) from RIL's India operations were lower by 12.1% at Rs 53,161 crore as against Rs 60,460 crore in the corresponding period of the previous year primarily due to lower price realization for refining and petrochemical products and emphasis in domestic placement....

Reliance Industries' (RIL) Q2FY20 EBITDA marginally beat estimates at Rs 221bn (+5% YoY, +4% QoQ).

RR's near term growth visibility remains high esp. in grocery and F&L as 1. it seems past its rummaging through formats phase and 2. the addressable market is massive. However, CDIT growth (biggest segment) should cool off as JIO phone sales moderate. We build in revenue/EBITDA/PAT CAGR of 21/26/30% over FY19-22E and assign an SOTP-based fair value of Rs. 2tn (EV), implying 18x Sept-21 EV/EBITDA (Rs. 300/sh) on RIL share count. Reliance Retail continues to outpace peers, albeit pace of growth has come off. Gross revenue grew 27% YoY; Core retail (Grocery/F&L;/CDIT) grew ~35% YoY in 2Q as all key segments performed well. While the network blitz-scaling continues, more impressive is that SSSG remains healthy across its core (5-14%). Leverage manageable, but inching up (1x in FY19 from Zero-debt in FY17). Historically, capital intensity has remained high (Internal accruals funded only 50% of capital needs over FY14-19; That said, post two years of near-exponential growth, the scale achieved might just be enough to cover capital needs through internal accruals going forward. Expect RR to be FCFE positive by FY21E.

19 October 2019 at INR49.2b (-5% YoY, +11% QoQ). The premium to SGRM reduced to USD2.9/bbl (v/s USD3.4 in 2QFY19 and USD4.6 in 1QFY20) as the company had a lower gasoline and FO yield, which primarily drove the improvement in SGRM. Also, the increase in prices of heavy crude had an adverse impact. in 2QFY19 and USD8.1/bbl in 1QFY20. Throughput was at 16.7mmt (our to 4.0mmt from 3.3mmt in 2QFY19 and 2.9mmt in 1QFY20. Petrochemical EBIT stood at INR75b (-6% YoY, flat QoQ), led by pressure on product spreads due to the global supply glut (largely from the US and China).

RIL is the largest private player in the refining and petrochemical in India.

In Apr'19, we had downgraded RIL due to concerns about its core refining and petrochem segments. The stock has declined by ~20% since then. While we maintain our thesis that refining and petrochem would continue facing headwinds, the reduction in debt would certainly act as a rerating trigger. In subsequent media interaction the management suggested that oil-tochemicals,' could include refining, petrochemical and auto fuel retailing. This could be carved out into a division where Aramco will have an economic...

Chairman Mukesh Ambani's FY19 AGM speech envisages: (a) deleveraging by FY21 through stake sales, (b) enhancing shareholder value, and (c) expanding RJio's value proposition.

Reliance Industries' (RIL) FY19 Annual Report spells out its vision across its diversified businesses.

Reliance registered a strong growth in Q1FY20 topline (+21.3% YoY to Rs. 161,349cr) primarily driven by 47.5% YoY growth in Retail segment (representing 18.7% of revenue) and 54.5% growth in Digital Services (~7.3% of revenue). This is only partially offset by weakness in Petrochemicals segment (-6.6% YoY; accounted for 18.4% of revenue), and Oil and Gas segment (-35.5% YoY; ~0.4% of revenue) impacted by lower production volumes, trade tension and weak demand growth. EBITDA margin declined 169 bps with Oil and Gas segment leading the declines (-11.6% YoY). EBIT margins fell 92bps driven by the fall in Refining and Marketing segment margins (113bps YoY) partially offset by the improved margins in Digital Services (+289bps...

RIL achieved net sales of Rs 161349 crore, an increase of 21% as compared to Rs 133069 crore 48% YoY respectively. Higher refinery throughput on YoY basis, contributed to the increase in revenue for the Refining business. Exports (including deemed exports) from RIL's India operations were lower by 4.5% at Rs 50,158 crore as against Rs 52,501 crore in the corresponding period of the previous year. Lower price realization across petrochemicals and refining products, led by 7.4% YoY decrease in Brent oil price, and lower volumes of fibre intermediates contributed to the decline in exports....