Accumulate Reliance Industries; target of Rs 800: KRChoksey

KRChoksey is bullish on Reliance Industries and has recommended accumulate rating on the stock with a target of Rs 800 in its April 23, 2012 research report.

“Reliance Industries Ltd (RIL) reported net Profit of Rs 4236 cr, in line with our expectation (Rs 4210 cr). Net profit declined by 21% y-o-y, mainly due to the company not able to arrest falling gas production from KG-D6, reduction in deltas across olefins and polyester chain. Net sales improved by 17% to Rs 85,182 cr on Yo- Y largely due to higher prices of products while increase in volume accounted only 2%. Other income was higher at Rs 2295 cr as against Rs 917 cr on a y-o-y basis primarily due to higher average liquid investments. Outstanding debt at the end of Q4FY12 was Rs 65,352 cr compared to Rs 66,236 cr as on 31st March 2011.”

“36% Dip in revenue on Y-o-Y basis and ~8% on Q-o- Q basis to Rs 2609 cr mainly due to fall in production to the level of 36 mmscmd (AvgQ4FY12) and transfer of 30% Participating Interest (PI) in KG-D6 to BP. RIL has identified satellite and cluster fields, which can be developed and connected to production facilities, to increase gas volumes. RIL, along with BP has suggested to the government integrated field development plan to reduce costs and increase gas production. The company hopes to submit integrated FDP by Dec-12, and hopes to bring the whole field into production in next three years. RIL provided positive commentary on E&P portfolio and BP’s technical expertise is expected to help arrest decline in gas production and eventually increase from current levels.”

“We believe that refining margin improving but still relatively low we expect pickup in regional margins in 2H CY12. Any gradual recovery in downstream demand and improvement in global operating rates would be positive trigger for petchem and We are more positive on upstream (revision of gas price and pick up in shale gas) key trigger would be greater visibility on non-D6 production. we recommend Accumulate on RIL with price objective of Rs 800/share,” says KRChoksey research report. 

Institutional holding more than 40% in Indian cos

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