Broking house, IL&FS Investsmart is bullish on Reliance Industries and has maintained buy rating on the stock.
IL&FS Investsmart report on Reliance Industries:
Refining and Petrochemicals growth to drive earnings:
"Reliance Industries Limited (RIL), India's largest private sector player and an integrated giant in the energy sector, will continue to benefit from strong cash flows by riding on the favorable demand-supply balance of petro products and petrochemicals in the international markets. Lack of any large capacity additions to the refining capacity will help maintain high GRM's for RIL."
"The petrochemical prices are expected to remain high due to demand supply imbalance (International capacity utilization is more than 90%) and the delay in the capacity additions expected in the Middle East. These factors may continue to drive profit growth for RIL in FY07-FY08. From FY09, the company's growth is likely to be supported by higher revenues from the E&P segment; RIL's aggressive foray into diversified fields such as real estate and retail is also likely to support future revenues."
Key Investment Highlights:
E&P-revenue contribution to increase from FY09E:
"RIL's E&P activities will increase sharply from FY09E onwards, when its KG D-6 and NEC-25 oil-fields commence production. This will increase RIL's E&P revenues by more than 150% in the next three years. During FY07-08E, revenues from E&P will be limited to that from the Panna Mukta and Tapti (PMT) fields only."
GRM to sustain:
"The high complexity of RIL's refinery has enabled it to maintain a GRM USD10.2 per/bbl in FY06, despite registering marketing losses (GRM includes marketing losses) during the year; the company's GRM is much higher than its domestic counterparts. We expect RIL's GRM to sustain in FY07E due to growing demand of petro products in domestic and international markets and absence of any major international capacity addition."
Petrochemicals – delayed international capacity addition will help maintain margins:
"The anticipated capacity additions in the Middle East have been delayed until FY08E. Consequently, the demand-supply balance in the international markets is likely to remain favorable, contributing to firm global prices. Therefore, we expect RIL's current EBITDA margins, at 23%, in the petrochemicals sector to sustain.
Valuation:
"We recommend a 'buy' on the stock. We have based our recommendation on the E&P, refining, and petrochemical businesses; RIL's initiatives in the real estate and retail sectors have not been included due lack of information."
Source:-Moneycontrol
Stay in Touch
ajay@sarthimanagement.com
IL&FS Investsmart report on Reliance Industries:
Refining and Petrochemicals growth to drive earnings:
"Reliance Industries Limited (RIL), India's largest private sector player and an integrated giant in the energy sector, will continue to benefit from strong cash flows by riding on the favorable demand-supply balance of petro products and petrochemicals in the international markets. Lack of any large capacity additions to the refining capacity will help maintain high GRM's for RIL."
"The petrochemical prices are expected to remain high due to demand supply imbalance (International capacity utilization is more than 90%) and the delay in the capacity additions expected in the Middle East. These factors may continue to drive profit growth for RIL in FY07-FY08. From FY09, the company's growth is likely to be supported by higher revenues from the E&P segment; RIL's aggressive foray into diversified fields such as real estate and retail is also likely to support future revenues."
Key Investment Highlights:
E&P-revenue contribution to increase from FY09E:
"RIL's E&P activities will increase sharply from FY09E onwards, when its KG D-6 and NEC-25 oil-fields commence production. This will increase RIL's E&P revenues by more than 150% in the next three years. During FY07-08E, revenues from E&P will be limited to that from the Panna Mukta and Tapti (PMT) fields only."
GRM to sustain:
"The high complexity of RIL's refinery has enabled it to maintain a GRM USD10.2 per/bbl in FY06, despite registering marketing losses (GRM includes marketing losses) during the year; the company's GRM is much higher than its domestic counterparts. We expect RIL's GRM to sustain in FY07E due to growing demand of petro products in domestic and international markets and absence of any major international capacity addition."
Petrochemicals – delayed international capacity addition will help maintain margins:
"The anticipated capacity additions in the Middle East have been delayed until FY08E. Consequently, the demand-supply balance in the international markets is likely to remain favorable, contributing to firm global prices. Therefore, we expect RIL's current EBITDA margins, at 23%, in the petrochemicals sector to sustain.
Valuation:
"We recommend a 'buy' on the stock. We have based our recommendation on the E&P, refining, and petrochemical businesses; RIL's initiatives in the real estate and retail sectors have not been included due lack of information."
Source:-Moneycontrol
Stay in Touch
ajay@sarthimanagement.com
No comments:
Post a Comment