Reliance Industries Ltd. share price target

RIL came out with a healthy set of numbers in Q4FY18 which was in-line with our estimates. Robust performance from its Petrochemicals and Retail division was offset by disappointing result by refinery and Jio. Petchem reported highest ever volume of 8.8MMT (+10% QoQ) as ROGC fully optimized during the quarter. Petchem EBIT margin expanded 356bps YoY to 17.2%, resulted to highest ever EBIT of Rs63.4 bn. However, lower crude throughput (-5% YoY) and lower GRM of US$11/bbl vs US@11.5/bbl hurt refinery profits. Also, lower ARPU (11% fall QoQ) to Rs137 impacted Jio profits negatively....

We value RJio at 10x EV/EBITDA (vs. 9x for Bharti/Idea) at an EV of Rs 2,519bn (Rs 420/sh of RIL). Reliance Jio (RJio) reported yet another strong quarter with 26.5mn (21.5mn in 3Q) net subscriber additions. Rjio added 78mn subs in FY18 to close at 186.6mn, ~16% market share in 1.5 years of launch. Revenue growth was modest at 3.5% QoQ to Rs 71.3bn. This is on account of decline in ARPU from Rs 154 to Rs 137 QoQ owing to tariff cuts in Jan-18. We expect ARPU to further decline in 1QFY19. EBITDA increased by 2.5% QoQ to Rs 26.9bn owing to higher license fees.

Reliance Industries Ltd.'s fourth quarter net profit misses street estimates. RIL achieved revenue of Rs 129,120 crore for Q4FY18, an increase of 39% as compared to Rs 92,889 crore in the corresponding period of the previous year. Increase in revenue is primarily on account of volume increase with start-up of petrochemicals projects and oil price related increase in realizations for refining and petrochemical products. The increase in consolidated revenues reflects robust growth of 134% in Retail business and continuing growth momentum in wireless subscriber additions for Digital Services business. Exports (including deemed exports) from India were higher by 32.5% at Rs 51,295 crore as...

EBITDA of Rs134.3bn (+19% yoy, -2% qoq) was 4% below due to higher upstream loss. Jio reported PAT of Rs5.1bn on Rs137/187mn ARPU/subs. Net revenue/EBITDA rose by 4%/3% qoq as higher subs were offset by lower ARPU due to tariff cut, cash discount etc. GRM of US$11.0/bbl was in line while volume declined by 6% qoq to 16.7mmt due to turnaround. But, opex dropped 16% qoq, hence EBIT was in line with estimate. Upstream business performance was weak on lower output and one-offs. Consol. net debt rose by 5% qoq to Rs1.41trn while suppliers' credit was up 1% at Rs760bn....

Reliance Industries' (RIL) 4QFY18 standalone EBITDA increased 19% YoY (-2% QoQ) to INR134b, below our estimate of INR149b, due to lower throughput of 16.7mmt (our estimate: 17.8mmt). GRM of USD11.0/bbl was also below our estimate of USD11.4/bbl. PAT rose 7% YoY (+3% QoQ) to INR87b, benefiting from higher other income of INR26b (our estimate: INR17b) and lower depreciation of INR27b (our estimate: INR33b). Standalone PAT for the year stood at INR336b, +7% YoY. Consolidated PAT stood at INR361b, +20.9% YoY led by contribution from RJio.

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...