1. No category

Result Update
October 14, 2014
Reliance Industries Ltd. (RIL)
PAT above expectation, maintain buy with target price of Rs.1,274
Current
Previous
CMP : Rs.958
Rating : BUY
Rating : BUY
Target : Rs.1,274
Target : Rs.1,274
STOCK INFO
BSE
NSE
Bloomberg
Reuters
Sector
Face Value (Rs)
Equity Capital (Rs Mn)
Mkt Cap (Rs Mn)
52w H/L (Rs)
Avg Daily Vol (BSE+NSE)
500325
RELIANCE
RIL.IN
RELI.BO
Refineries
10
3234.2
3,095,490
1142/ 794
3,656,545
SHAREHOLDING PATTERN
%
(as on Sep. 2014)
Institutions
Others, Incl Public
Promoters
30.78
23.96
45.26

RIL reported Q2FY15 PAT (Standalone) above street expectation on the back
of higher than expected GRM and better petchem margin.

Revenue decreased by 7% y-o-y (flat QoQ) to Rs. 964.86 bn (below consensus
of Rs. 983 bn) due to lower refining and Oil & Gas revenue while Reported
PAT stood at Rs. 57.4 bn (above consensus of Rs 55.81 bn).

EBITDA margin above the consensus (stood at 8.5% vs. 8.1% of consensus)
on the back of higher than expected GRM and better petchem margin.

GRM for the quarter stood at $8.3/bbl vs. $8.7/bbl in Q1FY15 and $7.7/bbl in
Q2FY14. RIL’s premium over Singapore GRM remains higher to $3.5/bbl vs.
$2.5/bbl in Q2FY14 aided by wider crude differential and sourcing advantage.
Revenue
EBIDTA
PAT
Adjusted PAT
Source: Company Filings;
IndiaNivesh Research
3m
-4
4
12m
12
30
Source: Capitaline, IndiaNivesh Research
Q1 FY15 Q2 FY14 Q‐o‐Q %
964860
82350
57420
57420
963510 1037580
75300
78490
56490
54900
56490
54900
Y‐o‐Y %
0
0
-1
-3
-7
-7
-8
-11
consensus
Q2FY15e
983,570
79,412
55,810
55,810
Variance(%)
-1.9
3.7
2.9
2.9

Petchem EBIT margin stood at 9.64%, improved by 169 bps QoQ led by strong
rebound in polymer, Fiber intermediates and aromatics margin.

In E&P business, Average KG-D6 production stood at 12.5 MMSCMD of gas
and 0.5 mmbbl of oil.

Retail and US Shale gas business continues to make remarkable progress and
registered 20% and 33.7% YoY growth in revenues, respectively.

Outstanding debt as on 30th September 2014 was Rs 1420.8 bn ($ 23 billion)
compared to Rs. 1387.61 (($ 22.6 billion) bn as on 31st March 2014. Cash and
cash equivalents stood at Rs. 834.56 bn ($ 13.5 billion).
Source: BSE
STOCK PERFORMANCE (%) 1m
RIL
-5
SENSEX
-3
Q2 FY15
Rs.mn
RIL v/s SENSEX
170.00
Segment wise performance
160.00
150.00
140.00
130.00
120.00
110.00
Q2 FY15
Q1 FY15
Q2 FY14
Q‐o‐Q %
Y‐o‐Y %
FY14
FY13
Y‐o‐Y %
249.3
917.8
13.8
2.2
237.2
910.0
15.6
1.9
5.1
0.2
0.9
-5.8
-11.4
-5.7
14.5
-33.0
964.7
3619.7
60.7
15.5
881.1
3337.7
82.8
9.5
1183.1
1164.6
248.9
974.6
14.6
3.3
1241.4
1.6
-4.7
4661
4311
9.5
8.4
-26.7
62.5
8.1
24.0
37.9
3.3
0.7
18.9
37.7
4.9
0.5
27.5
0.4
-4.0
19.3
73.3
127.9
28.9
2.6
65.9
62.0
232.6
Segmental Revenue(Rs. bn)
100.00
90.00
80.00
RIL
10/9/2014
9/25/2014
9/11/2014
8/28/2014
8/14/2014
7/3/2014
7/31/2014
7/17/2014
6/5/2014
6/19/2014
5/8/2014
5/22/2014
4/24/2014
4/10/2014
3/27/2014
3/13/2014
2/27/2014
2/13/2014
1/2/2014
1/30/2014
1/16/2014
12/5/2013
12/19/2013
11/7/2013
11/21/2013
10/24/2013
10/10/2013
70.00
Sensex
Source: Capitaline, IndiaNivesh Research
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in
Petchem
Refining
Oil & Gas
Others
Total
Segmental EBIT(R. bn)
Petchem
Refining
Oil & Gas
Others
Total
25.0
31.7
3.6
0.4
60.8
Segmental EBIT Margin (%)
Abhishek Jain
Research Analyst
Petchem
Mobile: +91 77383 93433
Tel: +91 22 66188832
abhishek.jain@indianivesh.in
Oil & Gas
IndiaNivesh Research
Refining
Others
-31.8
-6.7
26.9
57.1
86.1
132.2
16.3
4.2
6.3
8.4
238.8
Change in bps
9.6
4.1
24.1
29.9
7.9
4.1
31.3
26.9
10.1
3.3
24.3
12.7
169.0
-42.1
-1.9
87.0
-722.0
-25.9
292.1
1,713.7
17.5
3.4
-43.7
64.3
2.7
BPS
8.9
3.7
26.8
27.0
8.3
3.8
34.9
26.8
61.1
-17.9
-807.1
29.2
Source: Company Filings; IndiaNivesh Research;
IndiaNivesh Securities Private Limited
601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Result Update (contd...)
Refining GRM stood at USD 8.3/bbl in Q2FY15 vs. USD 7.7/bbl in Q2FY14

During Q2FY15, the refining division margin expand by 87 bps YoY on account
of favorable currency movement and better GRM. GRM for the quarter stood
at $8.3/bbl vs. $8.7/bbl in Q1FY15 and $7.7/bbl in Q2FY14. RIL’s premium over
Singapore GRM remains higher to $3.5/bbl vs. $2.5/bbl in Q2FY14 aided by
wider crude differential and sourcing advantage.

Singapore GRM declined 19% QoQ (declined 8.3% YoY) from USD5.8/bbl to
USD4.8/bbl, touching low of USD2.5/bbl in July-end, as auto-fuel cracks
declined.

Crude throughput stood at 17.3 MMT in Q2Y15, operating rate was at 112%.

The company’s US$4bn pet coke gasification project remains on schedule for
implementation by FY16 end.
Operating Metrics(Refining (USD/bbl)
RIL GRM
Singapore GRM
Premium
Refinery Thr' put (mmt)
Utilization (%)
Q2 FY15
Q1 FY15
Q2 FY14
8.3
4.8
3.50
17.3
112
8.7
5.8
2.90
16.7
108
7.7
5.2
2.50
17.7
114
Q‐o‐Q %
Y‐o‐Y %
-4.6
7.8
-17.2
-7.7
20.7
40.0
3.6
-2.3
3.7
-1.8
FY14
FY13
Y‐o‐Y %
8.1
5.9
2.20
68
110
9.2
7.7
1.40
68.5
110
-12.0
-23.4
57.1
-0.73
0.00
Source: Company Filings; IndiaNivesh Research;
Petrochemical segment: EBIT margin improved by 169 bps QoQ

Petchem EBIT margin stood at 9.64% (v/s 7.9% in Q1FY15 and 10.1% in
Q2FY14) improved by 169 bps QoQ led by strong rebound in polymer, Fiber
intermediates and aromatics margin.

Polyester production improved with the commissioning of the Silvassa plant

Total production increased by 5.6% QoQ (flat YoY) to 5.7 MMT.
Average natural gas production decreased to 12.5 MMSCMD in Q2 FY15

Average KG-D6 production stood at 12.5 MMSCMD of gas and 0.5 mmbbl of
oil.

RIL witnessed significant decline in gas production on yearly basis mainly
attributed to geological complexity, natural decline in the fields and higher
than envisaged water ingress.
E&P (Gross Oil Production mmbbl
PMT
KG-D6
Gross gas production(mmscmd
PMT
KG-D6
To t a l
Q2 FY15
Q1 FY15
Q2 FY14
Q‐o‐Q %
Y‐o‐Y %
FY14
FY13
Y‐o‐Y %
1.86
0.5
2.04
0.53
1.9
0.5
-8.8
-2.1
-5.7
0.0
7.4
2.03
8.2
2.91
-9.8
-30.2
6.3
12.5
18.8
7.1
13.0
20.1
7.4
13.9
21.3
-11.3
-14.6
-3.9
-6.5
-10.4
-11.8
7.1
13.7
20.9
9.0
26.4
36.9
-21
-48
-43
Shale gas business: revenue grew by 33.7% YoY
IndiaNivesh Research

Reliance’s shale business registered strong revenue growth of 33.7% Y-o-Y
led by record production achieved at Pioneer and Chevron JVs.

However, softening of benchmark gas prices impacted realization during the
quarter.
Reliance Industries Ltd|Result Update
October 14, 2014 | 2
Result Update (contd...)
Retail business on growth path
The retail business performed well despite challenging macroeconomic
environment. Total turnover increased by 20% YoY to Rs. 41.67 bn in 21FY15. EBIDTA
contribution was Rs. 1.86 bn.
Valuation
We believe the company would be beneficiary of hike in natural gas price. RIL’s new
refining/ petchem projects likely to add to earnings from end-FY16/FY17,Further,
Shale Gas and Retail business are also showing remarkable growth and likely to be
a key revenue and profitability drivers going ahead. At CMP Rs. 958 stock is trading
at 10.5x FY16E EPS which is lower than its mean of 15x. We maintain buy rating on
the stock with target price of Rs. 1,274.
Quick Fundamentals (Rs. Mn)
Reliance
Net sales Income from operat
Total Revenue
Cost of Revenues
Cost of materials consume
Purchase of stock in trade
change in inventory
Staff cost
other expenses
EBIDTA
Depreciation
EBIT
Interest Expense
Other income
Exceptioanl item
PBT
Provision for taxation
PAT
EPS (RS.)
EBITDA %
EBIT %
PBT %
PAT %
Q2 FY15
964,860
964,860
882,510
788,510
Q1 FY15
Q2 FY14
963,510 1,037,580
963,510 1,037,580
888,210
959,090
809,660
883,650
17,360
-5,760
9,320
73,080
82,350
22,270
60,080
7,580
21,400
17,160
-21,200
9,290
73,300
75,300
20,240
55,060
3,240
20,460
1,160
-1,850
8,080
68,050
78,490
22,330
56,160
8,050
20,600
73,900
16,480
57,420
17.8
Margin %
8.5
6.2
7.7
6.0
72,280
15,790
56,490
17.5
Margin %
7.8
5.7
7.5
5.9
68,710
13,810
54,900
17.0
Margin %
7.6
5.4
6.6
5.3
Q‐o‐Q %
0.1
0.1
‐0.6
‐2.6
Y‐o‐Y %
‐7.0
‐7.0
‐8.0
‐10.8
FY14
3,901,170
3,901,170
3,592,400
3,293,130
FY13
3,602,970
3,602,970
3,295,100
3,061,270
Y‐o‐Y %
-7.6
-7.6
-8.3
-7
1.2
NA
0.3
‐0.3
9.4
10.0
9.1
134.0
4.6
1,396.6
NA
15.3
7.4
4.9
‐0.3
7.0
‐5.8
3.9
5,240
4,120
33,700
256,210
308,770
87,890
220,880
32,060
89,360
5,020
-33,170
33,540
228,440
307,870
94,650
213,220
30,360
79,980
-4
-905
0
-11
0
8
-3
-5
-10
2.2
7.6
4.4
19.3
1.6
4.6
1.6
4.4
Basis Points (BPS)
-72
25
-51
30
-16
88
-9
57
278,180
58,340
219,840
68.1
Margin %
7.9
5.7
7.1
5.6
262,840
52,810
210,030
64.2
Margin %
8.5
5.9
7.3
5.8
-6
-9
-4
-6
BPS
63
26
16
19
Source: Company Filings; IndiaNivesh Research;
IndiaNivesh Research
Reliance Industries Ltd|Result Update
October 14, 2014 | 3
Result Update (contd...)
IndiaNivesh Securities Private Limited
601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007.
Tel: (022) 66188800 / Fax: (022) 66188899
e-mail: research@indianivesh.in | Website: www.indianivesh.in
Disclaimer: This document has been prepared by IndiaNivesh Securities Private Limited (IndiaNivesh), for use by the recipient as
information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or
published or made available to others, in whole or in part without prior permission from us. This document is not to be construed
as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance
is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise
of any investments will depend upon the recipients particular circumstances. The information contained in this document has been
obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh
independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any
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October 14, 2014 | 4
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