Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Money / Company Review: Reliance Industries
BackBack

Company Review: Reliance Industries

Company Review: Reliance Industries

Premium


Monetisation of the KG-D6 is likely to generate incremental free cash flow of $1 billion by FY11E.

More importantly, we believe that it sets the stage for exploratory upside arising from the other blocks currently held by RIL.

Our analysis of the company’s E&P portfolio implies a resource base of 20 billion boe, translating to $4.1/boe based on our SOTP of $31.6 billion for the E&P business. Litigation with RNRL and NTPC would be an overhang on the stock in the short-term.

We expect the extant business to post EBITDA of Rs160 billion in FY11E (Rs180bn in FY09) with RPet contributing Rs80 billion.

The lower profitability reflects significant refining/petchem capacity addition in CY09-10 attendant with flattish product demand; and lower light-heavy differential of $2.3/bbl ($5.6/bbl in FY09).

Based on SOTP methodology to value RIL we arrive at a target price of Rs2,020 (March ‘10). This implies 6% upside from current levels and constitutes the basis of our Hold recommendation.

Our base case fair value assumes7-7.5x EV/EBITDA FY11E earnings for the refining and petrochemical divisions; and implied $4/boe for the E&P division.

Click here for a detailed report

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 03 Aug 2009, 09:18 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App