Reliance Industries Ltd. share price target

our estimates. For Q4, GRMs were at US$8.2/bbl (PLe: US$8.4/bbl) due to weak gasoline spreads given high inventory and weak demand. However, gasoil spreads were healthy given low inventory. Q4 refining thruput were also lower at 16MTPA (18MTPA in Q4) due to maintenance shutdown. Management is constructive about refining margins as diesel spreads are likely to get a boost from implementation of IMO 2020, as ~3.5mbpd marine fuel Sulphur standards are likely to come down. RIL is well positioned to benefit given their high complexity. However, gasoline spreads are likely to be under pressure from high...

19 April 2019 USD8/bbl), as against USD11.0/bbl in 4QFY18 and USD8.8/bbl in 3QFY19; due to a planned shutdown in one of the CDUs. Premium over Singapore complex stood at USD5.0/bbl. Petrochem EBIT grew 23% YoY but declined 2% QoQ due to a shutdown in the PP and LDPE units. EBIT margin improved from 17.2% in 4QFY18 and 17.6% in 3QFY19 to 18.9% in the quarter due to a non-commensurate contraction in margins with respect to prices. On a blended basis, EBITDA/mt stood at USD422 (+10% YoY, +11% QoQ). Gas production from KG D6 stood at 1.82mmscmd in the quarter, down from 1.87mmscmd in 3QFY19.

RIL's stock price has almost tripled over the last five years, outperforming the Niftyby122% on a cumulative basis. This has been driven by the strengthening refining/petrochem businesses and the significant build-up in its retail and telecom segments

Reliance Industries Beats Estimates Even As Refining Margin Falls. Reliance Industries (RIL) achieved revenue of Rs 171,336 crore, an increase of 55.9% as compared to Rs 109,905 crore in the corresponding period of the previous year. Increase in revenue is primarily on account of higher price realizations and volumes for petrochemical and refining businesses along with continuing strong growth momentum in consumer businesses. Product prices for the refining and petrochemicals business increased in line with 10.4% higher average Brent crude oil price. The higher volumes in Petrochemical business are on account of stabilization and ramp-up of new petrochemical facilities. Retail business and Digital Services...

Our SOTP-based target for RIL is Rs 1,331/sh based on Dec-20 earnings (6.5x EV/e for standalone refining, 9x EV/e for petchem, Rs 6.0/sh for domestic E&P, 1x EV/invested capital for Shale, 20x EV/e for Retail and 10x EV/e for Telecom. Maintain BUY In 3QFY19, RIL proved itself yet again largely owing to better petchem margins and volumes, despite weaker GRMs. Petchem EBIT/kg stood at Rs 20.7/kg, up 16.3% YoY. This expansion of margins was owing to a better product mix and use of US ethane/refinery off-gases as a feedstock. Petchem production volumes were up 21.3% YoY to 9.7mmt, with the refinery off gas cracker (ROGC) ramping up. The performance of the refining segment was subdued. GRM was USD 8.8/bbl owing to volatility in crude oil prices, and weak light distillates spread. Q3 EBITDA and PAT stood at Rs 145.07bn and Rs 89.28bn respectively, each up 5.6% YoY.

We value RJio at 10x Dec-20E EV/EBITDA at an EV of Rs 3.18tn (Rs 537/sh of RIL). Reliance Jios (RJio) 3QFY19 operating performance was in-line. Subs/Revenue/EBITDA/APAT grew by 11/12.4/13.3/22% QoQ. Interest and depreciation continue to puzzle with modest rise of 10/9.5% QoQ. This is inspite of steep rise in usage. Jios consumer engagement (voice/data usage/sub) is healthy and steadily inching upward despite substantial subscriber addition on low-ARPU JioPhone2. RIL is swiftly strengthening its business and consumer propositions with investments in media/technology companies and through content deals. This bodes well from the strategic perspective.

18 January 2019 GRM stood at USD8.8/bbl, as against USD11.6/bbl in 3QFY18 and USD9.5/bbl in 2QFY19; throughput was at Singapore complex stood at USD4.5/bbl. GRM was higher than expected due to better crude optimization and optimal performance of all secondary units. Petchem EBIT grew 41% YoY (flat QoQ) to INR80b, primarily led by an increase in volumes. EBIT margin continued to shrink from 19.9% in 1QFY19 and 18.5% in 2QFY19 to 17.6% in 3QFY19. Production volumes were higher on account of ramp-up of ROGC. Gas production from KG D6 declined to 1.87mmscmd in the quarter.

Reliance Industries Q3FY19 results were a beat to our estimates on the back of better profits across segments and higher other income. While revenue grew by 56.7% YoY to Rs1.6 tr, EBITDA and PAT were up by 21.2%/9.7% YoY to Rs213/Rs103bn respectively. Petrochemicals and Organised Retail business segmental profits jumped 43% and 210%...

Reliance Industries' (RIL) Q3FY19 EBITDA was above estimates at Rs 213bn (+21% YoY, +1% QoQ) on (a) lower refinery operating costs at US$ 2.6/bbl, which caused EBITDA to come in Rs 8bn higher than estimates despite GRMs being in line at US$ 8.8/bbl, (b) marginally higher petchem EBITDA, and (c) higher RJio EBITDA (by Rs 2.5bn) led by better revenues despite ARPUs declining to Rs 130/month. We trim FY19E/FY20E earnings by...

Outlook Ramp-up of downstream projects to help boost refining and petchem margins; Retail and telecom businesses on strong footing: We expect RIL's refining margins to remain strong in FY2020E as the petcoke gasification project is expected to be fully ramped up by Q4FY2019E. Moreover, implementation of IMO regulation from January 2020 is expected to further benefit refining margins of RIL. Outlook for...