Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Reliance Industries
U pgrade to Buy on recent weakness
Event: Stock down to attractive levels, upgrade to buy
RIL is down 11% in 1MTD on: 1) uncertainty on KG-D6 gas volumes ,2) lower
petchem/refining contribution in 4QFY11 results. Going forward, we see little
downside on gas volumes and attribute the lower commodity contribution in
4QFY11 to the unscheduled shutdown which will reverse. As a result of higher
capacity utilization we hike our PT by 5% and our EPS estimates by 6% for both
FY12 and FY13
Impact: Pricing in the bad news, low downside risk
We believe downside is limited from here; ~3.4% downside to PT if gas peaks at
45 vs our assumption of 60mmscmd. Additionally, the company had a shutdown
at its refinery in 3Q11 and 4Q11 which negatively impacted its contribution at a
time when international margins were high. Going forward, we expect higher
operating rates in refining and petrochemicals will provide earnings support.
Action: Upgrade to a Buy- stock prices in a weak upstream outlook
Declining contribution from upstream means now nearly 75% of EBIT is
contributed by the refining and petrochemicals business, which has tended to be
ignored due to concerns over upstream. Additionally, we expect commodity
margins to bounce back as seasonal demand comes back from Q4CY11.
Valuation: Increase SOTP based PT to Rs 1,170/share(27% upside)
We value the petrochem/refining business at 7xFY13e EBIDTA and upstream on
NPV. At 6.3 x FY13e EV/EBIDTA and 11.4 FY13e EPS stock is attractive vs.
Asian peers which are trading at 7.6x EV/EBIDTA, 11.1xEPS. The stock is down
13% 6MTD vs. peers which are ~25% up in the same period.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Reliance Industries
U pgrade to Buy on recent weakness
Event: Stock down to attractive levels, upgrade to buy
RIL is down 11% in 1MTD on: 1) uncertainty on KG-D6 gas volumes ,2) lower
petchem/refining contribution in 4QFY11 results. Going forward, we see little
downside on gas volumes and attribute the lower commodity contribution in
4QFY11 to the unscheduled shutdown which will reverse. As a result of higher
capacity utilization we hike our PT by 5% and our EPS estimates by 6% for both
FY12 and FY13
Impact: Pricing in the bad news, low downside risk
45 vs our assumption of 60mmscmd. Additionally, the company had a shutdown
at its refinery in 3Q11 and 4Q11 which negatively impacted its contribution at a
time when international margins were high. Going forward, we expect higher
operating rates in refining and petrochemicals will provide earnings support.
Action: Upgrade to a Buy- stock prices in a weak upstream outlook
Declining contribution from upstream means now nearly 75% of EBIT is
contributed by the refining and petrochemicals business, which has tended to be
ignored due to concerns over upstream. Additionally, we expect commodity
margins to bounce back as seasonal demand comes back from Q4CY11.
Valuation: Increase SOTP based PT to Rs 1,170/share(27% upside)
We value the petrochem/refining business at 7xFY13e EBIDTA and upstream on
NPV. At 6.3 x FY13e EV/EBIDTA and 11.4 FY13e EPS stock is attractive vs.
Asian peers which are trading at 7.6x EV/EBIDTA, 11.1xEPS. The stock is down
13% 6MTD vs. peers which are ~25% up in the same period.
No comments:
Post a Comment