Buy Reliance Industries; target of Rs 915: KRChoksey

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Buy Reliance Industries; target of Rs 915: KRChoksey

KRChoksey is bullish on Reliance Industries and has recommended buy rating on the stock with a target of Rs 915 in its January 27, 2012 research report.

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RELATED NEWS Buy Indiabulls Real Estate; target of Rs 91: Motilal Oswal Buy Union Bank; target of Rs 320: Motilal Oswal Hold Wipro; target Rs 424: KRChoksey ALSO READ See previous views by KRChoksey See what other Experts & Brokerages are saying about Reliance See messages about Reliance Reliance BSE | NSE 31/05/12 Are Mutual Funds betting on Reliance?

KRChoksey is bullish on Reliance Industries and has recommended buy rating on the stock with a target of Rs 915 in its January 27, 2012 research report.

"Reliance Industries Ltd (RIL) reported net Profit of Rs 4440 cr, in line with our expectation (Rs 4680 cr). Net profit declined by 13.6% y-o-y, mainly driven by lower refining margins, negative delta on petrochemical business and unable to arrest falling gas production from KG-D6 field. Net sales improved by 42.2% to Rs 85,135 cr on Y-o-Y largely due to higher prices of products while increase in volume accounted only 3.9%. Other income was higher at Rs 1717 cr as against Rs 741 cr on a y-o-y basis primarily due to higher average liquid investments. Outstanding debt at the end of Q3FY12 was Rs 74,503 cr compared to Rs 67,397 cr as on 31st March 2011. The Company is debt free on a net basis as compared with gearing of 13.5% as on 31st March 2011. RIL had cash and cash equivalents of Rs 74,539 cr."

"32% Dip in revenue on Y-o-Y basis and ~21% on Q-o-Q basis to Rs 2832 cr mainly due to fall in production to the level of 41 mmscmd (AvgQ3FY12) and transfer of 30% Participating Interest (PI) in KG-D6 to BP, whereas EBIT margins have improved on the back of higher crude price realization of $111/bbl against $80/bbl in last year same period. Panna -Mukta field restored its operations and block achieving its normalized production. CBM Soghpur (M.P.) block is expected to start production of 3 mmscmd of gas in next 2 years, waiting for sales price approval from Govt. Revenue increased by 46.1% on YoY basis to Rs 76,738 cr in Q3FY12 in line with our estimation. Increase in revenue due to higher prices of products while increase in volume accounted only 3.9%. GRM were down to $6.8/bbl discount to Singapore complex GRM. Sharp decline in margins as lower demand and high product inventories impacted product cracks. Arab Heavy Light diff. Slipped down to $3.5/bbl from $4.1/bbl and Gasoline, naphtha margins remained weak which dragged RIL GRM discount to Singapore."

"We believe 1) The company would maintain GRM of $ 8/bbl over FY12 2) RIL to benefit from preferential access to TV18 and Network18 content for its 4G services. 3) Buyback will support share price in near term. Hence, we maintain our BUY rating on the stock with a price objective of Rs 915/share, an upside potential of 18%," says KRChoksey research report.

Shares held by Mutual Funds/UTI

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To read the full report click on the attachment