MOSL: RELIANCE INDUSTRIES (Neutral)-EBITDA exceeds estimates-GRMs at USD11.5/bbl
​Reliance Industries: EBITDA exceeds estimates; GRMs at USD11.5/bbl
(RIL IN, Mkt Cap USD68.8b, CMP INR1416, TP INR1264, 11% Downside, Neutral)
RIL’s 4QFY17 standalone EBITDA of INR113b (+5% YoY, +6% QoQ) exceeded our estimate of INR107b due to higher GRMs and throughput. PAT of INR81.5b (+11% YoY, +2% QoQ) too beat estimate of INR75.2b, led by a lower effective tax rate of 19%. Cumulative capex in RJio stands at INR1,790b, with 72m prime subscribers. Management guided for full commissioning of the refinery off-gas cracker (ROGC) project by 3QFY18 and the petcoke gasifier project by 4QFY18. Key drivers for near-term stock performance would be (1) core projects commissioning and (2) subscriber ramp-up/ARPU in telecom.
EBITDA beats estimate: Refining EBIT stood at INR62.6b (-2% YoY, +2% QoQ). 4QFY17 GRM stood at USD11.5/bbl (+6% YoY, +6% QoQ). Petchem EBIT was INR34.5b (+27% YoY, +3% QoQ), with margin of 13.7% coming in below 15.5% in 3QFY17 primarily due to a decline in polymer deltas.
Expect no further delays in core projects
- ROGC by 3QFY18: The ROGC project is expected to be fully commissioned by 3QFY18, and the petcoke gasifier project by 4QFY18.
- Jio capex reaches INR1.79t: Capex to date has reached INR1.79t. The company has written off INR120b on account of revaluation of spectrum. Jio’s prime user base reached 72m at end-FY17. The company is still unclear as to when would it stop capitalizing expenses.
Reliance Industries is primarily engaged in the production and market of petrochemical products, and refinery and retail of petroleum and LPG. Co.'s petrochemical products include polymer - polypropylene (PP), polyethylene (PE), poly vinyl chloride (PVC); polyester - polyester filament yarn (PFY), polyester staple fiber (PSF), polyethylene terephthalate (PET); polyester intermediates - paraxylene (PX), purified terephthalic acid (PTA), mono-ethylene glycol (MEG); and cracker products - ethylene, propylene and aromatics. Co. is also engaged in the manufacture of RELAB and textiles. Co.'s textile products are sold under the brand names: Only Vimal, Harmony, Reance, RueRel and V2.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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