Reliance Ind Q3FY17: Prabhudas Lilladher reiterate 'Accumulate'

Prabhudas Lilladher | July 31, 2014, midnight

  • In-line performance: RIL reported highest quarterly profits in Q3FY17. Results were in-line with estimates; Standalone EBITDA of Rs106bn (PLe: Rs108.8bn), PAT of Rs80.2bn (PLe: Rs79.3bn). Healthy performance was supported by healthy refining and petrochemicals division along with higher other income from investment sale.
  • For Q3, GRMs were strong at US$10.8/bbl (PLe: US$11.5/bbl) despite FCCU shutdown which impacted gasoline and propylene volumes. Petrochemicals profitability was also robust despite maintenance shutdown and demand hit from demonetisation; company successfully managed to export volumes to circumvent demand drag in domestic markets.
  • Petrochemical earnings resilient, E&P disappoints: For Q3FY17, petrochemicals EBIT were at Rs33.6bn (+30%YoY) supported by demand strength in polymers (+5%YoY) and polyester (+5%YoY) along with stable deltas. E&P EBIT for Q3FY17 was at Rs(1.25bn) due to lower volumes; KGD6 volume was at 7.5mmscmd (Q3FY16: 10.7mmscmd). To tackle natural decline, RIL has initiated two side-track projects to support MA field volumes.
  • Telecom capex at Rs1,710bn: RIL has spent Rs1,710bn towards RJio till Q3FY17, including Rs140bn towards spectrum acquisition. RJio has 72m subscribers with incremental addition of 0.6mn subscribers per day. Additionally, RIL plans to spend Rs300bn through FY18 to enhance network coverage to over 90% from current 70%.
  • Project commissioning/stabilisation key variable: RIL project has seen some delays and other 2 phases of Paraxylene project will be commissioned in Q4FY17, the offgas cracker in Q1FY18 and the petcoke gasification project’s full mechanical completion is expected by Q1FY18 end. We maintain our earnings; Reiterate “Accumulate” with a PT of Rs1,094.


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