IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, retains 'Add' on Reliance Industries (RIL).

"Our analysis of Reliance's FY11 balance sheet shows a strong improvement in operating cashflows, a 125 bps YoY improvement in ROE (to 12.5%, despite large cash on the balance sheet)," IIFL says.

"Some large write-offs in 1P-reserves and capex spent on overseas blocks and telecom, negligible capex in domestic upstream business, a doubling of losses in its retail business, and a continued reduction in net debt," the report added.

The report stated that we are downgrading FY12-13 EPS estimates by 6-9% to factor in lower gas production from KG-D6 and lower polyester margins. Retain Add with a target of Rs 1,010.

The report was published by IIFL’s Institutional Equities Research desk.