Eye on FY17 -RIL::HDFC Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Eye on FY17
RIL reported standalone APAT of Rs 50.9bn (-11.4%
QoQ) in 3QFY15. Weak results were led by inventory
losses in petro/petchem products due to the free fall
in crude prices. GRM declined to $ 7.3/bbl vs 8.3.
Margins on petchem were further under pressure to
liquidate inventory at falling prices.
The sharp fall in crude prices has raised concerns on
the global macros. Refining and petchem margins
may continue to be under pressure in the near term.
However, visibility on a jump in EBITDA to Rs 464bn
in FY17E (~50% higher than FY14) led by capex in the
core refining/petchem biz remains intact.
Initial benefits of capacity additions in chemicals will
be visible in FY16. However, ~80% benefit of the
capex will come in FY17. Along with the remaining
~20% benefit, FY18 will see the impact of imported
ethane for the petchem feed. We have marginally cut
our FY16/17 EBITDA estimates by ~4% factoring
lower commodity margins. We remain positive on RIL
on the back of productive capex in the core business.
Our SOTP target for RIL is Rs 1,100/sh rolling forward
to FY17E. Maintain BUY.
3QFY15 Highlights :
 Refining : GRM decline to $ 7.3/bbl (-12% QoQ) led by
inventory losses. Margins on all products (excl.
naphtha) were stronger (due to lag effect). Premium
over Singapore margins declined to $ 1.0 vs 3.5/bbl.
 Petrochemicals : PBIT declined by 9% QoQ to Rs 22bn
led by inventory losses and pressure to liquidate
inventory at falling prices.
 E & P India : Gas volumes from KG D6 declined to 11.8
mmscmd (-8% QoQ). Volume decline in Tapti/KG and
lower oil prices led to an EBIT of Rs 2.7bn (-20% QoQ).
 Other positives : (1) Retail has achieved critical mass
and is PAT positive. Biz is likely to deliver ~30% EBITDA
CAGR (2) Positive outlook for domestic E&P assets (Rseries/Satellite
fields) subject to pricing for deep fields
(3) Strong balance sheet (cons net D/E at 0.3).
 Key risk - rising investments in telecom : RIL has
invested USD 6bn in telecom until FY14, with a
guidance for additional capex of ~USD 6bn. We think it
is difficult to ascertain returns on these investments.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010788