RESULTS REVIEW 4QFY19 22 APR 2019

Reliance Industries
.

B
BUY
It’s all happening INDUSTRY OIL & GAS
We upgrade RIL to BUY after the 4QFY19 beat. We believe  R-Jio assets hived off: Reliance Jio Infocomm (RJI) and CMP (as on 18 Apr 2019) Rs 1,383
RIL will be the biggest beneficiary of the IMO regulations, Jio Digital Fibre (JDF) and Reliance Jio Infratel (RJInfra) Target Price Rs 1,535
as it is the most complex refiner globally. Hiving off R-Jio’s have entered into a scheme wherein RJI’s optic fiber Nifty 11,753
optical fiber and tower assets will unlock value by cable assets are hived off to JDF and its tower
reducing attributable consolidated debt. Sensex 39,140
infrastructure is hived off to RJInfra. RIL receives equity
(Rs 4.94bn) and OCPS (Rs 771.58bn). This increased KEY STOCK DATA
HIGHLIGHTS OF THE QUARTER
gross consolidated debt from Rs 3,325bn in FY18 to Rs Bloomberg RIL IN
 Refining: GRMs fell to USD 8.2/bbl (-25.5% YoY, -6.8%
3,878bn in FY19 of RIL. (Refer our note on RJio).
QoQ), beating Singapore complex margins by USD No. of Shares (mn) 6,339
5.0/bbl (vs. USD 4.5 in 3QFY19). This owes to the sharp  Near term outlook: We expect GRMs to rise, given the MCap (Rs bn) / ($ mn) 8,785/126,187
fall in light distillate cracks, since recovered. Revised IMO specification changes. This, plus the Jio asset hive 6m avg traded value (Rs mn) 11,579
bunker sulfur regulations by The International off will keep the stock buoyant.
Maritime Organisation (IMO) will create demand of STOCK PERFORMANCE (%)
~3.5mbpd of Gasoil/LSHS, driving up middle distillate STANCE 52 Week high / low Rs 1,407/907
cracks. RIL directly benefits, as ~50% of its throughput RIL is creating value via (1) Transition from a low-multiple 3M 6M 12M
at Jamnagar comprises middle distillates. refining business to the consumer-oriented, digitally fired
Absolute (%) 17.0 20.4 47.8
R-Jio, (2) Monetisation and deleveraging achieved by
 Petchem: Implied petchem sales volume is 3.56mmt Relative (%) 9.4 7.8 34.0
(+0.3%/-8% YoY/QoQ). EBIT/kg at Rs 21.9 was up 6.4% hiving off fiber and tower assets, (3) GRMs rising post the
QoQ, owing to strong Px and polyester margins. new IMO regulations (est. USD 9.2-12.0/bbl over FY19- SHAREHOLDING PATTERN (%)
Petchem margins might weaken given fresh Ethane- 21E). Our SoTP is Rs 1,535/sh (7.5x EV/e for refining, 9x Dec-18 Mar-19
based crackers in USA and weak Chinese demand. EV/e for petchem, Rs 6.0/sh for domestic E&P, 1x
Promoters 47.27 47.27
However, the integrated nature of RIL’s petchem plant EV/capital for Shale, 25x EV/e for Retail and 10x EV/e for
makes it competitive. Telecom). FIs & Local MFs 12.01 11.93
FPIs 24.31 24.32
Public & Others 16.41 16.48
Financial Summary (Standalone)
Pledged Shares 0.00 0.00
Year Ending March (Rs bn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) FY18 FY19P FY20E FY21E
Net Sales 835.97 840.37 (0.5) 1,000.96 (16.5) 2,900.42 3,710.19 3,810.64 3,837.83 Source : BSE
EBITDA 137.04 134.25 2.1 145.07 (5.5) 517.41 582.57 687.43 705.60 Nilesh Ghuge
PAT 85.56 86.97 (1.6) 89.28 (4.2) 336.12 351.63 423.37 437.72 [email protected]
Diluted EPS (Rs) 13.5 13.4 1.0 14.1 (4.2) 53.0 55.5 66.8 69.1 +91-22-6171-7342
P/E (x) 26.1 24.9 20.7 20.0
EV / EBITDA (x) 18.7 17.0 14.4 13.7 Divya Singhal
RoE (%) 11.1 9.8 10.0 9.5 [email protected]
Source: Company, HDFC sec Inst Research +91-22-6639-3038

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Quarterly Financial Snapshot (Standalone)

(Rs bn) 4QFY19 4QFY18 YoY(%) 3QFY19 QoQ (%) FY19 FY18 YoY %
Revenues 835.97 840.37 (0.5) 1,000.96 (16.5) 3,545.20 3,008.23 17.9
Material Expenses 587.98 606.72 (3.1) 747.93 (21.4) 2,542.88 2,130.20 19.4
Employee Expenses 14.05 12.46 12.8 14.56 (3.5) 57.83 48.44 19.4
Other Operating Expenses 96.90 86.94 11.5 93.40 3.7 369.95 315.37 17.3
EBITDA growth was led by EBIDTA 137.04 134.25 2.1 145.07 (5.5) 574.54 514.22 11.7
higher Petchem margins Depreciation 24.65 26.79 (8.0) 25.86 (4.7) 104.37 97.84 6.7
while volume was offset by EBIT 112.39 107.46 4.6 119.21 (5.7) 470.17 416.38 12.9
lower GRM Other Income 28.83 26.21 10.0 24.56 17.4 98.46 92.17 6.8
Interest Cost 27.91 14.60 91.2 24.05 16.0 101.37 50.22 101.9
PBT 113.31 119.07 (4.8) 119.72 (5.4) 467.26 458.33 1.9
Tax 27.75 32.10 (13.6) 30.44 (8.8) 119.35 119.78 (0.4)
RPAT 85.56 86.97 (1.6) 89.28 (4.2) 347.91 338.55 2.8
Interest cost was higher APAT 85.56 86.97 (1.6) 89.28 (4.2) 347.91 338.55 2.8
owing to the capitalization EPS 13.2 13.4 (1.6) 13.7 (4.2) 53.5 52.4 2.2
of new projects in the Source: Company, HDFC Sec Inst Research
petchem and refining
divisions Margin Analysis
4QFY19 4QFY18 YoY (bps) 3QFY19 QoQ (bps) FY19 FY18 YoY (bps)
Material Expenses as % of Net Sales 70.3 72.2 (186) 74.7 (439) 71.7 70.8 92
Employee Expenses as % of Net Sales 1.7 1.5 20 1.5 23 1.6 1.6 2
Other Expenses as % of Net Sales 11.6 10.3 125 9.3 226 10.4 10.5 (5)
EBITDA Margin (%) 16.4 16.0 42 14.5 190 16.2 17.1 (89)
Net Profit Margin (%) 10.2 10.3 (11) 8.9 132 9.8 11.3 (144)
Tax Rate (%) 24.5 27.0 (247) 25.4 (94) 25.5 26.1 (59)
Source: Company, HDFC Sec Inst Research

Page | 2
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Quarterly Segmental Snapshot (Standalone)

(Rs bn) 4QFY19 4QFY18 YoY(%) 3QFY19 QoQ (%) FY19 FY18 YoY(%)
Segmental Revenues
Petrochemicals 413.95 367.80 12.5 447.04 (7.4) 1,647.66 1,244.69 32.4
Refining 688.14 743.29 (7.4) 888.83 (22.6) 3,004.78 2,668.84 12.6
Oil & Gas 5.20 6.12 (15.0) 6.03 (13.8) 25.30 25.66 (1.4)
Others 5.32 3.71 43.4 3.51 51.6 18.66 13.82 35.0
Petrochemicals’ YoY growth Gross Revenues 1,112.61 1,120.92 (0.7) 1,345.41 (17.3) 4,696.40 3,953.01 18.8
in profitability was led by Less: Inter segment 206.13 211.98 (2.8) 266.07 (22.5) 859.40 679.14 26.5
higher Px and PTA margins Less: Excise Duty/service tax recovered 70.51 68.57 2.8 84.65 (16.7) 291.80 265.64 9.8
and increased throughput Net Revenues 835.97 840.37 (0.5) 994.69 (16.0) 3,545.20 3,008.23 17.9
post the stabilisation of Segmental Results Before Interest, Tax & Exceptional Items
ROGC and Px plant Petrochemicals 78.19 63.44 23.3 79.93 (2.2) 313.57 215.85 45.3
Refining 40.26 55.89 (28.0) 49.45 (18.6) 184.30 240.85 (23.5)
Oil & Gas 0.96 (4.16) (123.1) 1.19 (19.3) (2.39) (11.59) (79.4)
Others 0.19 1.08 (82.4) 0.44 (56.8) 0.82 4.71 (82.6)
Total 119.60 116.25 2.9 131.01 (8.7) 496.30 449.82 10.3
EBIT Margins (%) 4QFY19 4QFY18 YoY (bps) 3QFY19 QoQ (bps) FY19 FY18 YoY (bps)
Petrochemicals 18.9 17.2 164 17.9 101 19.0 17.3 169
Refining 5.9 7.5 (167) 5.6 29 6.1 9.0 (289)
Oil & Gas 18.5 (68.0) 8,644 19.7 (127) (9.4) (45.2) 3,572
Source: Company, HDFC Sec Inst Research

Page | 3
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

E&P business Refining business

Current production from CBM KG-D6  The throughput was at 16 mmt (-4.2% YoY and -11.1%
asset is ~0.9mmscmd  KG-D6 gas volumes further declined to 1.82 mmscmd QoQ 103% utilisation). GRM was at USD 8.2/bbl(-25.5%
(-57.7% YoY, -45.8% QoQ). Oil volumes were at 0.97 YoY, -6.8% QoQ). Sequential decline was owing to
mmbbl (-25.4% YoY, -10.2% QoQ). We expect KG D6 lower Gasoline and Naphtha cracks.
volume to ramp-up to 10.7 mmscmd, owing to R-series  The premium over Singapore GRM widened to USD
field development, by FY21. 5.0/bbl.
Gas production from R-
PM  Gasoline cracks decreased QoQ from USD 12.1/bbl to
cluster expected in 2HFY21 is
 Gas volume was at 12.7 BCF (-16.0% YoY, -5.8% QoQ) in USD 11.8/bbl. Naphtha crack increased from USD
12mmscmd, which will be 4Q. Lower production was mainly on account of 0.3/bbl to USD 1.1/bbl. Gasoil cracks declined 2.5%
ramped-up to 32mmscmd by natural field decline and unplanned shutdown of wells QoQ to USD 11.8/bbl. ATF cracks were down from USD
FY22 owing to asset integrity issues. We expect production 12.3/bbl to USD 11.3/bbl.
to decline further to 20.4 BCF in FY20.
Petchem and fibers
CBM
 The current production rate is ~1 mmscmd, with a  Polymer: The spreads for PP were below the 5-year
The Chinese Govt’s average at USD 237/mt. HDPE-Naphtha spread
gradual ramp-up. Production is expected to ramp up to
enforcement of a complete decreased further to USD 515/mt from USD 590/mt in
2.5-3.5mmscmd by FY21.
ban on the import of wastes 3Q. PVC margin improved to USD 416/mt from USD
(plastic, paper, slag and Shale Gas 410mt in 3Q.
textiles) from other countries  Average realisations were USD 3.7/mcfe (-11.7 YoY%, -  Polyester: Polyester intermediate margins were strong
is driving demand for virgin 12.3% QoQ). particularly for Px and PTA, up +29.1/+20.7% YoY
polymer, thus supporting respectively.
1QFY19 2QFY19 3QFY19 4QFY19 Retail
margins
Production (BCFe) 23.8 21.2 20.9 18.9
Avg Realisation  Retail revenue rose from Rs 242bn in 4QFY18 to Rs
4.1 4.1 4.2 3.7
(USD/mcfe) 367bn (+51.6% YoY).
Oil & Gas revenue was down Gas price
15.0% YoY, despite (USD/mmbtu)
2.8 2.9 3.6 3.2  Core retail (ex-Connectivity and petro) EBITDA margin
was 7.4% in 4Q, up from 3.7% a year ago and 7% in
realization being up 54% Revenues (USD mn) 86 81 78 62
FY19P, up from 6% in FY18.
owing to ~34% decline in EBITDA (USD mn) 19 13 -1 -8
production. Average gas Source: Company, HDFC Sec Inst Research  Same store sales growth is 25% for grocery, 25% for
fashion and 40% for electronics.
production from KGD6 was
1.82mmscmd (-57.7% YoY, -  Total investment in retail business in Rs 250bn (Rs
45.8% QoQ) 120bn equity and Rs 130bn debt).
 We expect retail segment EBITDA of Rs73.11bn in FY20
and Rs 99.27bn in FY21.

Page | 4
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Refineries’ Performance
RIL’s GRM Trend vs. Singapore Complex GRM Crude Throughput (MnT)

18.1
RIL GRM Singapore GRM 18.5

18.0

18.0
$/bbl

17.8

17.7

17.7
GRM is lower QoQ because

12.0
11.9
14.0 18.0

17.5
11.6
11.5

11.5

11.0
10.8

17.3
10.5
of lower Gasoline and

10.1
12.0 17.5

9.5

16.8
Naphtha cracks

8.8

16.7
10.0

8.3

8.2

16.6
17.0

7.2
7.0
6.7
8.0

6.4
6.4

6.1
6.0
16.5

16.0
5.1
5.0
6.0

4.3
3.2
16.0
4.0
2.0 15.5
Petcoke gasifier
- 15.0
stabilization is in-progress

1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
and is expected to be
completed by Jun-19
v

Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Petchem Performance
EBIT/kg of sales volumes
stood at Rs 21.98/kg Petchem Sales Volumes Petchem EBIT and EBIT/kg
compared to Rs 20.5/kg in 4,000 kT EBIT Rsbn EBIT (Rs/kg)-RHS
3Q and 17.9/kg in 4QFY18 3,500
95 25.0

3,868
3,707
85

3,557
3,547
3,505
3,000
3,326

20.0
75
3,058

80
80
2,500

78
77
2,765

65
2,617
2,564

15.0
2,486

2,417

2,000
55

63
1,500

57
45 10.0

49
1,000
35

40
5.0
500

35

35
34
25

29
- 15 -
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19

1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Page | 5
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Polymers Performance Polyesters Performance

Polymers Production Intermediates Production Volumes
PE PP PVC PX PTA MEG
1,600 kt 3,000 kt
Polymer production was
1,400
down 1.64% YoY and 3.16% 2,500
1,200
QoQ to 1.44mmt 2,000
1,000
800 1,500
600 1,000
400
Polyester intermediate 500
200
production was up 6.8%
- -
YoY but down 11.16% QoQ

4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
to 2.53mmt owing to
planned shutdown
Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Polymer Margins (Indicative Industry Spreads) Polyester Production Volumes

PP - Propylene HDPE - Naphtha POY PSF PET
PVC - Naphtha - EDC 800 kt
Polyester production was US$/t
700
800
up 18% YoY and 4% QoQ to 600
700
725kt 600 500
500 400
400 300
300
200
200
100
100
- -

1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19

Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Page | 6
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

US Shale Performance
Average realisations were Production Volumes And Gas Realisation Key Financials Trend
USD 4.2/mcfe (+1.3 YoY%, Production (RS) Gas price (US$/mmbtu) Revenues EBITDA EBITDA Margin (%)
+2.4% QoQ) US$/mmbtu BCFe US$ mn
4.0 50.0 120 60%
45.0
100 45%
40.0
3.0 80
35.0 30%
30.0 60
2.0 25.0 15%
40
20.0
0%
15.0 20
1.0
10.0 - -15%
5.0
- - (20) -30%

1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Domestic E&P Performance

PM gas volume was at 13.8 PMT: Production Volumes And Gas Realisation KG: Production Volumes And Gas Realisation
BCF (-7% YoY, -8.6% QoQ). KG Gas Volume (BCM) KG Gas Price ($/mmbtu)
PMT Gas Vol (BCM) PM Gas Price ($/mmbtu)
Lower production was BCM $/mmbtu
BCM $/mmbtu 30.0 4.0
mainly on account of 18.0 7.0
3.5
natural field decline and 16.0 6.0
14.0 3.0
unplanned shutdown of 5.0 20.0
12.0 2.5
wells owing to asset 10.0 4.0 2.0
integrity issues 8.0 3.0 1.5
6.0 10.0
2.0 1.0
4.0
2.0 1.0 0.5
- - - -
KG-D6 gas volumes declined

1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19

further to 1.82 mmscmd

Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Page | 7
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Retail Performance

Grocery (%) Consumer Electronics (%) Revenues non-petro Revenues Petro

Fashion and Lifestyle (%) Connectivity (%) EBITDA Margin (%)
Retail revenue rose from Rs Petro Retail (%) Retail Revenue (Rs bn)- RHS 400.0 Rs bn 6.0%
100 400 350.0
242bn in 4QFY18 to Rs 5.0%
300.0
367bn (+51.6% YoY). This 4.0%
250.0
jump being below 100% for
200.0 3.0%
the first time in FY19 50 200
150.0
2.0%
100.0
1.0%
50.0
- 0.0%
0 -

4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19
Source: Company, HDFC Sec Inst Research Source: Company, HDFC Sec Inst Research

Page | 8
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Assumptions
FY16 FY17 FY18 FY19 FY20E FY21E
Crude price (US$/bbl) 47.0 48.0 57.5 78.0 75.0 75.0
INR-USD 65.8 66.9 66.0 70.1 72.0 72.0
Refining Business
GRM (US$/bbl) 10.8 11.0 11.6 9.2 11.5 12.0
Crude throughput (mmt) 69.6 70.1 69.8 68.3 70.0 70.0
Upstream Business
PMT
Gas (BCF) 72 63 62 51 20 20
Oil (mmbbl) 7 6 5 4 2 2
Panna Mukta Gas price (US$/mmbtu) 5.7 5.7 5.7 5.7 5.7 5.7
Tapti Gas price (US$/mmbtu) 5.6 5.6 5.6 5.6 8.4 8.4
KG
Gas (mmscmd) 10 8 5 3 6 11
Gas price (US$/mmbtu) 4.7 3.1 3.5 4.0 4.0 4.0
Petrochemicals
Sales volume (mmt) 10.2 10.1 12.7 14.8 14.7 14.7
EBIT/kg of sales volumes (Rs/kg) 10.1 13.0 16.5 21.3 20.1 19.4
Source: Company, HDFC Sec Inst Research

Changes In Estimates
FY20E FY21E
Old New %Ch Old New %Ch
The changes in estimates
factors in a higher interest Crude oil (USD/bbl) 75.0 75.0 - 75.0 75.0 -
cost and lower other Exchange rate (Rs/USD) 72.0 72.0 - 72.0 72.0 -
income and lower petchem GRM (USD/bbl) 11.5 11.5 - 12.0 12.0 -
Petchem margin (Rs/kg) 21.6 20.1 (7.0) 20.7 19.4 (6.0)
margin owing to supply glut
Revenue (Rs bn) 3,963.7 3,810.6 (3.9) 3,993.1 3,837.8 (3.9)
EBITDA (Rs bn) 690.0 687.4 (0.4) 709.0 705.6 (0.5)
Interest (Rs bn) 81.5 111.6 37.0 88.3 116.7 32.3
Other Income (Rs bn) 98.8 106.2 7.4 109.3 118.1 8.0
APAT (Rs bn) 443.0 423.4 (4.4) 455.8 437.7 (4.0)
EPS (Rs/share) 69.9 66.8 (4.5) 71.9 69.1 (4.0)
Source: HDFC Sec Inst Research

Page | 9
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

SOTP Valuation (Based On Mar-21E)

Business EBIDTA (Rs bn) Multiple Value (Rs bn) Value per share* Valuation basis
RIL declared final dividend of
Petrochemicals 362 9.0 3,262 551 EV/EBITDA on Mar 21E
Rs. 6.5/sh at a payout of
Refining 309 7.5 2,317 391 EV/EBITDA on Mar 21E
11.0% on FY19 earnings
E&P
PMT 5 6.0 31 5 EV/EBITDA on Mar 21E
We have raised our multiple KG D6 56 10 NPV
for refining from 6.5x to 7.5x NEC 26 4 NPV
owing to stronger outlook CBM 29 5 NPV
on the segment. We also Shale Gas 6.1 2.0 878 148 x Inv as on Mar-18
raise our multiple for retail Investments in Retail 99.3 25.0 2,482 419 EV/EBITDA on Mar 21E
from 20x EV/e to 25x EV/e Investments in Telecom 2,904 490
owing to strong margin Consolidated net Debt (2,894) -489 x as on Mar-21
profile and robust growth Value per share* 9,091 1,535
expectations Source: Company, HDFC Sec Inst Research, * Valuation is based on 5.92bn shares (net of treasury shares)

Page | 10
 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Peer Set Comparison

MCap CMP TP EPS (Rs/sh) P/E (x) P/BV (x) ROE (%)
RECO
(Rs bn) (Rs) (Rs) FY18 FY19P FY20E FY21E FY18 FY19P FY20E FY21E FY18 FY19P FY20E FY21E FY18 FY19P FY20E FY21E
Reliance Industries 8,785 1,385 BUY 1,535 53.0 55.5 66.8 69.1 26.1 25.0 20.7 20.0 2.8 2.2 2.0 1.8 11.1 9.8 10.0 9.5
ONGC 2,013 160 BUY 190 15.9 18.7 21.1 21.4 10.1 8.6 7.6 7.5 1.0 1.0 0.9 0.9 10.5 11.9 12.8 12.3
Indian Oil Corp 1,432 156 BUY 201 22.8 16.9 19.5 22.3 6.8 9.2 8.0 7.0 1.3 1.3 1.2 1.1 19.9 14.0 15.2 15.8
BPCL 714 363 NEU 392 41.2 30.5 34.6 36.5 8.8 11.9 10.5 9.9 2.1 1.9 1.7 1.5 25.4 16.6 16.9 16.0
HPCL 390 256 BUY 318 41.7 25.8 29.6 32.1 6.1 9.9 8.6 8.0 1.6 1.5 1.3 1.2 28.7 15.6 16.1 15.8
Petronet LNG 360 240 BUY 338 13.9 13.6 16.1 19.9 17.3 17.6 14.9 12.1 3.7 3.5 3.2 2.8 23.3 20.4 22.3 24.8
GAIL 792 351 BUY 410 20.4 29.7 28.4 30.6 17.2 11.8 12.4 11.5 2.0 1.8 1.6 1.5 11.7 15.7 13.7 13.5
Oil India 194 179 BUY 234 24.6 32.7 30.6 31.5 7.3 5.5 5.9 5.7 0.7 0.6 0.6 0.5 9.4 12.2 10.4 9.6
Indraprastha Gas 229 327 BUY 394 9.6 11.0 12.4 14.5 34.1 29.8 26.3 22.5 6.5 5.7 5.0 4.4 20.9 20.5 20.3 20.7
Mahanagar Gas 100 1017 BUY 1,141 48.4 58.6 57.5 60.1 21.0 17.4 17.7 16.9 4.8 4.1 3.6 3.2 24.3 25.5 21.8 20.0
GSPL 101 179 BUY 207 11.9 14.8 13.3 14.2 15.0 12.1 13.5 12.6 2.0 1.8 1.6 1.5 14.0 15.5 12.5 12.2
Asian Oil Field Services* 3 90 NR 164 5.4 8.3 12.3 16.4 16.6 10.9 7.3 5.5 2.2 1.8 1.4 1.1 23.7 20.1 23.9 25.0
Source: Company, HDFC sec Inst Research, * Fair Value

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 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Standalone Income Statement Standalone Balance Sheet

(Rs bn) FY17 FY18 FY19P FY20E FY21E (Rs bn) FY17 FY18 FY19P FY20E FY21E
Revenues 2,420.25 2,900.42 3,710.19 3,810.64 3,837.83 SOURCES OF FUNDS
Growth % 3.8 19.8 27.9 2.7 0.7 Share Capital 32.51 63.35 63.39 63.39 63.39
Raw Material 1,645.72 2,020.65 2,702.83 2,620.33 2,609.33 Reserves And Surplus 2,850.62 3,083.12 3,989.83 4,349.36 4,721.09
Employee Cost 44.34 47.40 58.34 71.80 88.38 Total Equity 2,883.13 3,146.47 4,053.22 4,412.75 4,784.48
Other Expenses 297.63 314.96 366.45 431.08 434.53
Long-term Debt 787.23 815.96 1,180.98 1,280.98 1,380.98
EBITDA 432.56 517.41 582.57 687.43 705.60
Short-term Debt 665.00 634.89 667.72 654.37 641.28
EBIDTA Margin (%) 17.9 17.8 15.7 18.0 18.4
Total Debt 1,452.23 1,450.85 1,848.70 1,935.35 2,022.26
EBITDA Growth % 9.9 19.6 12.6 18.0 2.6
Deferred Tax Liability 247.66 279.26 473.17 482.63 492.29
Depreciation 84.65 95.80 105.58 117.47 123.33
EBIT 347.91 421.61 476.99 569.97 582.27 Long-term Provision 21.18 27.09 29.87 30.47 31.08
Other Income (Including EO TOTAL SOURCES OF FUNDS 4,604.20 4,903.67 6,404.96 6,861.20 7,330.10
87.09 82.20 94.19 106.15 118.12
Items) APPLICATION OF FUNDS
Interest 27.23 46.56 97.51 111.63 116.75 Net Block 1,531.30 2,009.64 2,031.88 2,078.93 2,120.15
PBT 407.77 457.25 473.67 564.49 583.63
Capital WIP 1,341.89 994.83 1,115.57 1,227.59 1,339.64
Tax 93.52 121.13 122.04 141.12 145.91
LT Loans And Advances 104.18 176.99 360.93 368.15 375.51
RPAT 314.25 336.12 351.63 423.37 437.72
Total Non-current Investments 1,427.28 1,754.67 2,639.00 2,639.00 2,639.00
EO (Loss) / Profit (Net Of Tax) - - - - -
Inventories 340.18 395.68 441.44 490.69 494.19
APAT 314.25 336.12 351.63 423.37 437.72
APAT Growth (%) 14.8 7.0 4.6 20.4 3.4 Debtors 54.72 104.60 121.10 104.40 105.15
AEPS 49.6 53.0 55.5 66.8 69.1 Cash and Cash Equivalent 536.60 560.08 714.04 817.32 1,102.48
AEPS Growth % 14.8 7.0 4.6 20.4 3.4 Other Current Assets 131.31 178.76 333.49 353.81 378.64
Source: Company, HDFC Sec Inst Research Total Current Assets 1,062.81 1,239.12 1,610.07 1,766.22 2,080.44
Creditors 681.61 886.75 882.41 835.21 841.17
Other Current Liabilities & Provns 181.65 384.83 470.08 383.48 383.48
Total Current Liabilities 863.26 1,271.58 1,352.49 1,218.69 1,224.65
Net Current Assets 199.55 (32.46) 257.58 547.53 855.80
TOTAL APPLICATION OF FUNDS 4,604.20 4,903.67 6,404.96 6,861.20 7,330.10
Source: Company, HDFC Sec Inst Research

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 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

Standalone Cash Flow Standalone Key Ratios

(Rs bn) FY17 FY18 FY19P FY20E FY21E FY17 FY18 FY19P FY20E FY21E
Reported PBT 407.77 457.25 473.67 564.49 583.63 PROFITABILITY %
Non-operating & EO Items (69.53) (62.92) (94.19) (106.15) (118.12) EBITDA Margin 17.9 17.8 15.7 18.0 18.4
Interest Expenses (8.12) 10.70 97.51 111.63 116.75 EBIT Margin 14.4 14.5 12.9 15.0 15.2
Depreciation 84.65 95.80 105.58 117.47 123.33 APAT Margin 13.0 11.6 9.5 11.1 11.4
Working Capital Change 195.33 205.32 60.61 (176.61) (12.85) RoE 11.6 11.1 9.8 10.0 9.5
Tax Paid (95.60) (86.15) (122.04) (141.12) (145.91) RoIC 26.6 29.5 22.3 20.1 19.2
OPERATING CASH FLOW ( a ) 514.50 620.00 521.14 369.70 546.84 RoIC (Including-CWIP in cap.emp.) 11.0 11.9 12.6 13.2 12.5
RoCE 8.5 8.6 7.8 7.6 7.4
Capex (302.66) (247.00) (248.56) (276.54) (276.60)
EFFICIENCY
Free Cash Flow (FCF) 211.84 373.00 272.58 93.16 270.24
Tax Rate % 22.9 26.5 25.8 25.0 25.0
Investments (300.98) (327.39) (884.33) - -
Fixed Asset Turnover (x) 0.5 0.5 0.6 0.6 0.6
Non-operating Income 87.09 82.20 94.19 106.15 118.12
Inventory (days) 51 50 43 47 47
Others Debtor (days) 8 13 12 10 10
INVESTING CASH FLOW ( b ) (516.55) (492.19) (1,038.70) (170.39) (158.48) Other Current Assets (days) 20 22 33 34 36
Debt Issuance/(Repaid) 30.24 91.44 880.35 86.65 86.91 Payables (days) 103 112 87 80 80
Interest Expenses 8.12 (10.70) (97.51) (111.63) (116.75) Other Current Liab & Provns (days) 27 48 46 37 36
FCFE 250.20 453.74 1,055.42 68.18 240.40 Cash Conversion Cycle (days) (51) (75) (45) (26) (23)
Share Capital Issuance 6.92 1.25 - - - Net Debt/EBITDA (x) 2.1 1.7 1.9 1.6 1.3
Dividend - (39.16) (48.16) (63.83) (66.00) Net D/E 0.3 0.3 0.3 0.3 0.2
FINANCING CASH FLOW ( c ) 45.28 42.83 734.68 (88.82) (95.83) Interest Coverage 16.0 10.8 5.9 6.1 6.0
NET CASH FLOW (a+b+c) 43.23 170.64 217.12 110.50 292.52 PER SHARE DATA (Rs)
EO Items, Others (17.56) (19.28) - - - EPS 49.6 53.0 55.5 66.8 69.1
Closing Cash & Equivalents 536.60 560.08 714.04 817.32 1,102.48 CEPS 62.9 68.1 72.1 85.3 88.5
Source: Company, HDFC Sec Inst Research Dividend 6.2 6.8 6.5 8.6 8.9
Book Value 454.8 496.4 639.4 696.1 754.8
VALUATION
P/E (x) 27.9 26.1 24.9 20.7 20.0
P/Cash EPS (x) 22.0 20.3 19.2 16.2 15.6
P/BV (x) 3.0 2.8 2.2 2.0 1.8
EV/EBITDA (x) 22.4 18.7 17.0 14.4 13.7
EV/Revenue (x) 4.0 3.3 2.7 2.6 2.5
Dividend Yield (%) 0.4 0.5 0.5 0.6 0.6
OCF/EV (%) 5.3 6.4 5.3 3.7 5.6
FCFF/EV (%) 2.2 3.9 2.8 0.9 2.8
FCFE/M Cap (%) 2.9 5.2 12.0 0.8 2.7
Source: Company, HDFC Sec Inst Research
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 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

RECOMMENDATION HISTORY
Date CMP Reco Target
Reliance Inds TP
12-Apr-18 929 BUY 1,102
1,600
3-May-18 973 BUY 1,178
1,500 9-Jul-18 978 BUY 1,200
1,400 29-Jul-18 1,129 BUY 1,270
1,300 9-Oct-18 1,108 BUY 1,331
1,200 18-Oct-18 1,149 BUY 1,303
1,100 9-Jan-19 1,104 BUY 1,303
1,000 18-Jan-19 1,134 BUY 1,331
900 9-Apr-19 1,335 NEU 1,387
800 22-Apr-19 1,383 BUY 1,535
700 Rating Definitions
Apr-18

Apr-19
Sep-18

Feb-19
Jun-18
Jul-18

Mar-19
Dec-18
Oct-18
Aug-18

Nov-18

Jan-19
May-18

BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

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 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

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 RELIANCE INDUSTRIES : RESULTS REVIEW 4QFY19

HDFC securities
Institutional Equities
Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,
Senapati Bapat Marg, Lower Parel,Mumbai - 400 013
Board : +91-22-6171 7330 www.hdfcsec.com

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