Motilal Oswal - Reliance Industries Limited (RELIANCE) MOSL: RELIANCE INDUSTRIES (Buy)-Consol. EBITDA in line led by healthy retail performance

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Motilal Oswal

Swarnendu Bhushan

MOSL: RELIANCE INDUSTRIES (Buy)-Consol. EBITDA in line led by healthy retail performance

Reliance Industries: Consol. EBITDA in line led by healthy retail performance

(RIL IN, Mkt Cap USD98.9b, CMP INR1149, TP INR1479, 29% Upside, Buy)

Reliance Industries’ (RIL) 2QFY19 standalone EBITDA increased 15% YoY (-2% QoQ) to INR149b, below our estimate of INR163b, due to lower-than-expected refining throughput and GRM. GRM stood at USD9.5/bbl (our estimate: USD10.2/bbl) and throughput at 17.7mmt (our estimate: 18.0mmt). Standalone PAT grew 7% YoY (flat QoQ) to INR88.6b (our estimate: INR93.3b). Consolidated EBITDA of INR211b (+36% YoY, +2% QoQ) was in line with our estimate, driven primarily by a better-than-expected retail operational performance. Consolidated PBT (+16% YoY, -4% QoQ) was 8% lower than our estimate due to higher interest cost and lower other income. Consolidated PAT stood at INR95.5b (our estimate: INR100.5; +18% YoY, +1% QoQ).

Lower GRM: GRM stood at USD9.5/bbl (our estimate: USD10.2/bbl; -21% YoY, -10% QoQ) and throughput at 17.7mmt (our estimate: 18.0mmt; -2% YoY, +7% QoQ). Premium over Singapore complex stood at USD3.4/bbl. GRM was adversely impacted by the shutdown of FCCU, weaker petrol/ATF cracks and narrower light-heavy differentials.
Robust volume growth, healthy deltas drive profitability: Petchem EBIT grew 62% YoY (+3% QoQ) to INR79.7b, led by favorable margins and strong volume growth. EBIT margin of 18.5% was lower than 19.9% in 1QFY19 but marginally higher than 18.3% in 2QFY18, primarily due to strong polyester chain deltas, stable polymer deltas and feedstock cost optimization. Production volumes were higher on account of ramp-up of ROGC.

19/10/2018 32 EN

Underlying

Reliance Industries Limited

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.

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INE002A01018 National Stock Exchange of India India

Provider

Motilal Oswal

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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Analysts

Swarnendu Bhushan

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MOSL: RELIANCE INDUSTRIES (Buy)-Consol. EBITDA in line led by healthy retail performance

Indian Telcos & Towers News reports that the Indian government may voluntarily give telcos $12bn of relief on AGR liabilities would be a thesis-changing event. If it happens it would be probably the biggest ever positive regulatory decisio

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MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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