Reliance Industries Ltd

Transcription

1 GICS Industry : Oil, Gas & Consumable Fuels l Sub Industry : Oil & Gas Refining & Marketing l Website : Reliance Industries Ltd Key Stock Indicators NSE Ticker : RELIANCE Bloomberg Ticker : RIL:IN Face value / Share: 1. Div. Yield (%):.7 CMP (as on 2 Dec 21 Rs/share): week range up to 2 Dec 21 (Rs)(H/L): /919.2 Market Cap as on 2 Dec 21 (Rs mn): 3,457,446 Enterprise Value as on 2 Dec 21 (Rs mn): 3,925,552 Shares outstanding (mn): Free Float (%): 55.3 Average daily volumes (12 months) : 4,84,461 Beta (2 year) : 1.1 Reliance Industries Ltd (RIL) is amongst India s largest private sector companies, with net sales of Rs 2,29 billion and total assets amounting to around Rs 2,291 billion in RIL s activities range from exploration and production (E&P) of oil and gas, refining and marketing, and petrochemicals (polyester, polymers, and fibre intermediates), to textiles and retailing. KEY HIGHLIGHTS Amongst the largest producer of natural gas in the country RIL commenced production of hydrocarbons from its D6 block in the KG basin in the mid 28-9 with the production of sweet crude of 42 API. The company has also commenced gas production from KG-D6 from the Dhirubhai 1 and 3 discoveries. In one of the fastest gas field ramp-ups in the world, gas production by RIL has been ramped up to nearly 6 mmscmd thus far. Gas from the KG- D6 field is being received at an onshore facility at Gadimoga in the state of Andhra Pradesh and delivered to the East-West pipeline. RIL has signed gas contracts for a 5-year period at $4.2/mmbtu with companies in the fertiliser, power and the sponge iron sectors for 5 years till Major exporter of petroleum products In 29-1, RIL processed 6.9 million tonnes of crude and exported 32.8 million tonnes of product as compared to 22.6 million tonnes in the previous year. Reliance exports to 111 countries, including some of the most stringent quality-driven and value-driven developed nations. RIL A global leader in petrochemicals Key Financial Indicators Mar-8 Mar-9 Mar-1 Revenue (Rs mn) 1,374, ,512, ,29,412.6 EBITDA margins (%) PAT (Rs mn) 195, , ,431.6 PAT margins(%) Gearing (x) EPS (Rs/share) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) n.m. : Not meaningful 11.8 Shareholding (As on September 3, 21) FII 17% DII 1% Others 28% RIL is the largest petrochemicals player in the domestic market with very high market shares in all key product segments. The company is also the world s largest producer of polyester and is one of the leading players for other products in terms of capacity. RIL is the only integrated manufacturer in the domestic polyester market. The company meets its MEG and PTA requirements through its in-house fibre intermediates capacity. KEY RISKS International crude oil and downstream product prices Light-heavy crude differential Project execution risks Progress on acquisitions Stock Performances vis-à-vis market Returns (%) YTD 1-m 3-m 12-m RELIANCE NIFTY Indexed price chart (index) Promoter 45% (') Note: 1) YTD returns are since April 1, 21 to Dec 2, 21. 2) 1-m, 3-m and 12-m returns are up to Dec 2, 21. Dec-9 Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Volumes (RHS) RELIANCE NIFTY CRISIL COMPANY REPORT 1

2 BACKGROUND RIL is India's largest private sector company. In 1975, the company expanded its presence into the textiles sector. Since its initial public offering in 1977, RIL has expanded rapidly and integrated backwards into other sectors, most notably petrochemicals production, crude oil refining and oil and gas E&P. Currently, the company s operations range from the E&P of oil and gas, manufacturing of petroleum products, polyester products, polyester intermediates, plastics, polymer intermediates, chemicals and synthetic textiles and fabrics. Reliance enjoys a global leadership position in its businesses, and is the largest polyester yarn and fibre producer and one of the top ten producers of major petrochemical products in the world. It has the largest refining capacity at any single location. It has also ventured into organised retailing, telecom through broadband wireless access (BWA) and hotel businesses. The company s international businesses include investment in GAPCO (GAPCO owns and operates large storage facilities and has a retail distribution network in East African countries) and upstream global oil and gas blocks, including investments in shale gas. COMPETITIVE POSITION Peer Comparison Reliance Industries Ltd. Bharat Petroleum Corporation Ltd Indian Oil Corporation Ltd. Hindustan Petroleum Corpn. Ltd. Mar-1 Mar-1 Mar-1 Mar-1 Revenue (Rs mn) 2,29, ,22,55.9 2,547, ,115,51. EBITDA margins (%) PAT (Rs mn) 243, , , ,751.5 PAT margins(%) Gearing (x) EPS (Rs/share) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) n.m: Not meaningful FINANCIAL PROFILE Lower GRMs reduce profitability despite rise in revenues RIL s revenues increased from Rs 1,512.5 billion in 28-9 to Rs 2,29.4 billion in 29-1 on the back of commencement of operations from its SEZ refinery at Jamnagar and production of gas from its KG-D6 block. However weak demand, significant global capacity additions, high level of inventories and rising crude oil prices weakened products cracks and refining margins across regions. This almost halved RIL s GRM from $12.2 per bbl in 29-1 to $6.6 per bbl in This decline lowered the company s operating profitability from 16.5% in FY9 to 15.1% in FY1. Key Financial Indicators Units Mar-8 Mar-9 Mar-1 Revenue Rs million 1,374, ,512, ,29,412.6 EBITDA margins PAT Rs million 195, , ,431.6 PAT margins Revenue growth EBITDA growth PAT growth Gearing Times RoCE RoE CRISIL COMPANY REPORT 2

3 INDUSTRY PROFILE Refining and marketing Petroleum product demand increased at a CAGR of 4.3 per cent from million tonnes in 24-5 to 138 million tonnes in 29-1, whereas total domestic refinery capacity grew at a CAGR of 7.1 per cent to touch 17 mtpa in This increased capacity has led to increased exports of refined products. Global capacity utilisation rates of refineries have fallen from 88 per cent in 25 to 83 per cent in 29, thereby putting pressure on international product prices and hence capping GRMs. Indian GRMs were slightly better than the global GRMs due to strong demand and proportion of more complex refineries. Due to significant fall in crude oil prices in 29-1, under-recoveries on cooking and auto fuels for PSU oil marketing companies (OMCs) also declined to 46 billion in 29-1 from 132 billion in In June 21, the government deregulated petrol prices, while the domestic retail selling price of SKO, LPG, and HSD are still regulated. The OMCs dominate the retail marketing space and enjoy a near-monopoly status. As on September 29, of the total 38,314 retail fuel outlets in India, IOC has 18278, BPCL has 8551 and HPCL has 865, with private players like Reliance, Essar and Shell, making up the remainder. Oil and gas exploration: Domestic crude oil production rose from 6.8 MMT in to 33. million metric tonnes (MMT) in However, since 1987 no new oilfields (except for Cairn India s Rajasthan fields) have been discovered, because of which, domestic production has stagnated at MT till date. NELP was formulated in to encourage exploration activity and private sector participation in order to raise crude oil production in the country. The fiscal terms offered under the NELP rounds are attractive to augment investments - investors have been offered tax holiday for 7 years from the beginning of commercial production of crude oil. Subsequently, eight rounds under NELP have been conducted. A total of 126 discoveries have been made till date, of which 32 pertain to the pre-nelp period and 3 from the small and medium sized fields offered in and the remaining 7 pertain to the NELP blocks. The success of NELP is evident from the increase in the average accretion to in-place reserves, from million metric tonnes (MMT) till to MMT till However, exploration stage is more risky as compared to production stage since there is high probability of misses and the gestation period is also very long. Petrochemicals Petrochemicals can be categorised into two groups, namely basic petrochemicals and polymers. Basic petrochemicals like olefins (ethylene, propylene and butadiene) and aromatics (benzene and toluene) are obtained by cracking naphtha or natural gas. Ethylene is the main product and propylene and butadiene are by-products. They form the building blocks of a variety of products such as polymers, fibre intermediates and elastomers. Polymers, commonly referred to as plastics, are manufactured mainly from ethylene and propylene. They are used in packaging, automobiles, consumer durables, and furniture and household articles. Some of the most commonly used polymers include high-density polyethylene (hdpe), low-density polyethylene (ldpe), linear low-density polyethylene (lldpe), polypropylene (PP), poly vinyl chloride (PVC) and polystyrene (PS). The size of the petrochemicals market in India in 29-1 was estimated at Rs 465 billion. During the year, the domestic consumption of polymers posted robust growth of 15 per cent due to healthy demand from end-user segments, whereas consumption of basic petrochemicals recorded a 1 per cent growth. CRISIL COMPANY REPORT 3

4 ANNUAL RESULTS Income Statement Balance sheet (Rs million ) Mar-8 Mar-9 Mar-1 (Rs million ) Mar-8 Mar-9 Mar-1 Net Sales 1,369,9.6 1,511,8. 2,28,43.5 Equity share capital 14, , ,78.2 Operating Income 1,374, ,512, ,29,412.6 Reserves and surplus 695, , ,83,469.2 Tangible net worth 79, ,854. 1,113,249.4 EBITDA 227, , ,68.1 Deferred tax liablity: asset 77, , ,775.7 EBITDA Margin Long-term debt 46, , ,794.6 Short-term-debt 1, , ,952.9 Depreciation 5,42. 56, ,458. Total debt 57, , ,747.5 Interest 2, , ,179.3 Current liabilities 234, , ,213.4 Other Income 54, , ,98.9 Total provisions 33, , ,235.2 Total liabilities 1,562,462. 2,132,27.1 2,291,221.2 PBT 23, , ,126.5 Gross block 89,22.5 1,221, ,914,65.9 PAT 195, , ,431.6 Net fixed assets 953,7.9 1,48, ,469,756.9 Investments 118, , ,122.5 PAT Margin Current assets 49, , ,341.8 Receivables 6, , ,829.2 No. of shares (Mn No.) Inventories 191, , ,933.2 Cash 44, , ,98.3 Earnings per share (EPS) Total assets 1,562,462. 2,132,27.1 2,291,221.2 Cash flow Ratio (Rs million ) Mar-8 Mar-9 Mar-1 Mar-8 Mar-9 Mar-1 Pre-tax profit 23, , ,951.7 Revenue growth (%) Total tax paid -26, , ,432.5 EBITDA growth(%) Depreciation 5,42. 56, ,458. PAT growth(%) Change in working capital -68, , ,778.7 EBITDA margins(%) Cash flow from operating activities 184, , ,198.5 Tax rate (%) Capital Expenditure -265, , ,852.3 PAT margins (%) Investments and others -65, , ,767.1 Dividend payout (%) Cash flow from investing activities -331, , ,619.4 Return on Equity (%) Equity raised/(repaid) , ,33.2 Return on capital employed (%) Debt raised/(repaid) 17, , ,75.1 Dividend (incl. tax) -19, , ,39.1 Gearing (x) Others (incl extraordinaries) 2, , ,592.2 Interest coverage (x) Debt/EBITDA (x) Cash flow from financing activities 172, , ,91.8 Change in cash position 25, , ,512.7 Asset turnover (x) Opening cash 19, , ,421. Current ratio (x) Closing cash 44, , ,98.3 Gross current assets (days) n.m : Not meaningful; QUARTERLY RESULTS Profit and loss account (Rs million) Sep-1 % of Rev Sep-9 % of Rev Jun-1 % of Rev Sep-1 % of Rev Sep-9 % of Rev No of Months Revenue 581, , , ,171, , EBITDA 1, , , , , Interest 5, , , , , Depreciation 33, , , , , PBT 61, , , , , PAT 49, , , , , CRISIL COMPANY REPORT 4

5 FOCUS CHARTS & TABLES Rs mn 7, 6, 5, 4, 3, 2, 1, Dec-7 Mar-8 Quarterly sales & y-o-y growth Jun-8 Sales Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sales growth y-o-y (RHS) Sep Rs mn 9, 8, 7, 6, 5, 4, 3, 2, 1, Dec-7 Mar-8 Quarterly PAT & y-o-y growth Jun-8 Net Profit Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 2 Sep-1 Net profit growth y-o-y (RHS) Rs/share 6 EPS 3 Movement in operating and net margins Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 OPM NPM Jun-1 Sep-1 Shareholding Pattern () Dec 29 Mar 21 Jun 21 Sep 21 Promoter FII DII Others Board of Directors Director Name Mukesh Dhirubhai Ambani (Mr.) Ramniklal Hirachand Ambani (Mr.) Designation Chairman & Managing Director Director Mansingh Laxmidas Bhakta (Mr.) Non-Executive Director Dipak Chand Jain (Prof.(Dr.)) Non-Executive Director Pawan Kumar Kapil (Mr.) Wholetime Director, Executive Director Dharam Vir Kapur (Dr.) Non-Executive Director Raghunath Anant Mas helkar (Dr.) Non-Executive Director Hital Rasiklal Meswani (Mr.) Director Nikhil Rasiklal Meswani (Mr.) Director Ashok Rama Shankar Mis ra (Prof.(Dr.)) Non-Executive Director Mahesh Pras ad Modi (Mr.) Non-Executive Director Madhus udana Sivaprasad Panda (Mr.) Director Yogendra Premkrishna Trivedi (Mr.) Non-Executive Director Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at , or via clientservicing@crisil.com. CRISIL COMPANY REPORT 5