MOSL: RELIANCE INDUSTRIES (Neutral)-Standalone EBITDA/PAT largely in line-GRMs at USD11.9/bbl

​Reliance Industries: Standalone EBITDA/PAT largely in line; GRMs at USD11.9/bbl

(RIL IN, Mkt Cap USD68.8b, CMP INR1586, TP INR1499, 5% Downside, Neutral)

• Reliance Industries' (RIL) 1QFY18 standalone EBITDA rose 7% YoY (+3% QoQ) to INR116b, largely in line with our estimate of INR118.5b. Reported PAT rose 9% YoY (flat QoQ) to INR81.9b, in line with our estimate of INR82.9b. Reported GRM stood at USD11.9/bbl (est. of USD10) and refining throughput at 17.3mmt (est. of 17.5mmt).
• EBITDA in line: Refining EBIT stood at INR64b (-3% YoY, +2% QoQ). 1QFY18 GRM stood at USD11.9/bbl v/s USD11.5/bbl in 1QFY17 and 4QFY17. GRM was much higher, despite weakening in gasoline/diesel cracks and lower light-heavy and Brent-Dubai spreads, due to better yield/crude optimization and risk management. Petchem EBIT was INR40b (+37% YoY, +15% QoQ), with margin of 16.5% coming in ahead of 13.7% in 4QFY17, primarily due to strengthening PP and PE deltas.
• Expect no further delays in core projects: Management guided for full commissioning of the ROGC project in another 45-60 days. No change in commissioning schedule of petcoke gasifier; expecting by 4QFY18.
• Domestic E&P continues to shrink: E&P EBIT stood at -INR2.3b v/s INR480m in 1QFY17 and -INR780m in 4QFY17. KG-D6 gas production stood at 6.4mmscmd (-27% YoY, -14% QoQ). Shale gas production was down to 34.7bcfe (-22% YoY,-11% QoQ) due to temporary shut-in at several wells.