RIL Q4 PAT seen down 32% at Rs 3657.1 cr: R K Global

R K Global has come out with its earnings estimates on Reliance Industries for March FY12. According to the research firm, company's Q4FY12 sales are likely to go up by 2.8% at Rs 74705.9 crore, Year-on-Year (YoY) basis.

The company's net profit is seen down 32% at Rs 3657.1 crore, YoY.

R K Global estimates on Reliance Industries for Q4FY12:

Revenue to grow 2.8% Y-o-Y

We estimate RIL to post net revenue of `747059mn during Q4FY12, reporting 2.8% Y-o-Y growth. The subdued growth in revenue is attributed to production decline in its refinery segment primarily on account of 3 week maintenance shutdown of one crude distillation unit at its SEZ refinery this quarter. We expect RIL’s crude throughput to be at 15.3MMT this quarter as against 16.7MMT in Q4FY11. We see petchem volumes to be lower this quarter at 4.8MMT as against 5.2MMT.

Subdued refinery and petchem margins to impact profitability

Decline in Arab L-H differentials and weakness in distillate cracks will continue to put pressure on the refining margins in Asia-Pac region. We expect RIL’s refinery margin to be at USD 7.6/bbl for this quarter. While in petchem segment, margin pressure was felt in PE and PP while PVC margins saw some improvement. We expect RIL’s Operating Profit and Net Profit to decline 28.9% Y-o-Y and 32.0% Y-o-Y to Rs 76555mn and Rs 36571mn respectively.

Valuation

At CMP of Rs 751.25, the stock is trading at P/E and EV/EBITDA of 8.1x and 5.6x FY13E EPS and EBITDA of Rs 93 and Rs 466790mn respectively.

Key triggers to watch out for this quarter:

• Refining GRM
• Petchem Margins
• Oil & Gas Output from its KG-D6 basin.

We will update our target price post results and are keeping our TP of Rs 839 unchanged with high downside risk in earnings going forward.

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