MOSL: RELIANCE INDUSTRIES (Buy)-3QFY19 RESULTS-Refinery margin boosted by crude optimization, secondary units’ performance
Reliance Industries 3QFY19 RESULTS: Refinery margin boosted by crude optimization, secondary units’ performance
(RIL IN, Mkt Cap USD101.2b, CMP INR1134, TP INR1426, 26% Upside, Buy)
Reliance Industries’ (RIL) 3QFY19 standalone EBITDA increased 12% YoY (-4% QoQ) to INR145b, below our estimate of INR149b, due to a lower-than-expected petrochem performance. GRM stood at USD8.8/bbl (our estimate: USD7.5/bbl) and throughput at 18.0mmt (our estimate: 17.5mmt). Standalone PAT grew 8% YoY (+1% QoQ) to INR89.3b (our estimate: INR87.4b). Consolidated EBITDA of INR213b (+21% YoY, +1% QoQ) was ahead of our estimate, driven primarily by a better-than-expected retail performance. Consolidated PAT stood at INR103.8b (our estimate: INR95.4b; +10% YoY, +9% QoQ).
- Higher-than-expected GRM: GRM stood at USD8.8/bbl, as against USD11.6/bbl in 3QFY18 and USD9.5/bbl in 2QFY19; throughput was at 18.0mmt (our estimate: 17.5mmt; -1% YoY, +8% QoQ). Premium over 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 boosted by volumes: 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.
- Domestic E&P continues the downtrend: MA field has stopped production. Gas production from KG D6 declined to 1.87mmscmd in the quarter. CBM production stood at 0.99mmscmd.
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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