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For 2QFY2012, Reliance Industries (RIL) reported 36.7% yoy growth in its bottom
line due to strong growth in earnings from refining and petrochemical margins.
PAT growth was restricted to 15.8% yoy because of the dip in production from the
KG-D6 field. We maintain our Buy recommendation on the stock.
Robust 2QFY2012 performance: RIL’s net sales grew by 36.7% yoy to `78,569cr
in 2QFY2012, slightly below our estimate of `81,603cr. Net sales growth was
mainly driven by growth in the petrochemicals segment (up 39.5% yoy to
`21,066cr) and the refining segment (up 37.1% yoy to `68,096cr). During
2QFY2012, production from KG-D6 stood at 2.7mn bbl (down 42.1% yoy) of
crude oil and 303.4bcf (down 20.3% yoy) of natural gas. RIL’s gross refining
margin (GRM) stood at US$10.1/bbl in 2QFY2012 (compared to US$7.9/bbl in
2QFY2011). The company managed to earn a spread of US$1.0/bbl over
Singapore complex refining margin during the quarter. Other income increased
by 64.0% yoy to `1,102cr. Consequently, PAT grew by 15.8% yoy to `5,703cr,
slightly below our expectation. RIL informed that it would stop all E&P activities
for the next two months and it, along with BP, will jointly re-visit its
entire E&P portfolio.
Outlook and valuation: RIL’s extant businesses (refining and petrochemicals)
continued to perform well during the quarter. However, there are some concerns
on the KG basin gas output. Nevertheless, we believe RIL’s deal with BP is a
positive one, as the combined expertise of both the parties will result in
optimization of producing blocks and enhancement of resources in exploratory
blocks. Thus, the ramp-up in producing fields would improve investor confidence.
We maintain our Buy view on RIL with an SOTP-based target price of `1,060.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Reliance Industries (RIL) reported 36.7% yoy growth in its bottom
line due to strong growth in earnings from refining and petrochemical margins.
PAT growth was restricted to 15.8% yoy because of the dip in production from the
KG-D6 field. We maintain our Buy recommendation on the stock.
Robust 2QFY2012 performance: RIL’s net sales grew by 36.7% yoy to `78,569cr
in 2QFY2012, slightly below our estimate of `81,603cr. Net sales growth was
mainly driven by growth in the petrochemicals segment (up 39.5% yoy to
`21,066cr) and the refining segment (up 37.1% yoy to `68,096cr). During
2QFY2012, production from KG-D6 stood at 2.7mn bbl (down 42.1% yoy) of
crude oil and 303.4bcf (down 20.3% yoy) of natural gas. RIL’s gross refining
margin (GRM) stood at US$10.1/bbl in 2QFY2012 (compared to US$7.9/bbl in
2QFY2011). The company managed to earn a spread of US$1.0/bbl over
Singapore complex refining margin during the quarter. Other income increased
by 64.0% yoy to `1,102cr. Consequently, PAT grew by 15.8% yoy to `5,703cr,
slightly below our expectation. RIL informed that it would stop all E&P activities
for the next two months and it, along with BP, will jointly re-visit its
entire E&P portfolio.
Outlook and valuation: RIL’s extant businesses (refining and petrochemicals)
continued to perform well during the quarter. However, there are some concerns
on the KG basin gas output. Nevertheless, we believe RIL’s deal with BP is a
positive one, as the combined expertise of both the parties will result in
optimization of producing blocks and enhancement of resources in exploratory
blocks. Thus, the ramp-up in producing fields would improve investor confidence.
We maintain our Buy view on RIL with an SOTP-based target price of `1,060.
