|
|
| India Infoline Research Team / 10:21 , Jul 23, 2012 |
|
|
|
CMP Rs723, Target Rs750, Upside 3.7%
-
Revenues at Rs918bn, higher by 13% yoy; lower than our estimates
-
OPM falls 491bps yoy driven by fall in EBIT margins of refining and petrochemical segments and also on account of lower contribution of the high margin oil and gas segment
-
GRMs were at US$7.6/bbl v/s our expectations of US$7/bbl
-
Higher cash balance and better yields have resulted in 77% yoy jump in other income
-
PAT at Rs44.7bn was better than our expectations owing to lower effective tax rate
-
Maintain Market Performer rating with a revised 9-month price target of Rs750; key risks: weakness in GRMs, falling petrochemical spreads, increasing regulatory risks in E&P segment Result table
| (Rs m) |
Q1 FY13 |
Q1 FY12 |
% yoy |
Q4 FY12 |
% qoq |
| Net sales |
918,750 |
810,180 |
13.4 |
851,820 |
7.9 |
| Material costs |
(783,480) |
(653,400) |
19.9 |
(728,460) |
7.6 |
| Purchases |
(1,630) |
(5,730) |
(71.6) |
(2,420) |
(32.6) |
| Personnel costs |
(8,470) |
(8,780) |
(3.5) |
(5,970) |
41.9 |
| Other overheads |
(57,700) |
(43,010) |
34.2 |
(49,340) |
16.9 |
| Operating profit |
67,470 |
99,260 |
(32.0) |
65,630 |
2.8 |
| OPM (%) |
7.3 |
12.3 |
(491) bps |
7.7 |
(36) bps |
| Depreciation |
(24,340) |
(31,950) |
(23.8) |
(26,590) |
(8.5) |
| Interest |
(7,840) |
(5,450) |
43.9 |
(7,680) |
2.1 |
| Other income |
19,040 |
10,780 |
76.6 |
22,950 |
(17.0) |
| PBT |
54,330 |
72,640 |
(25.2) |
54,310 |
0.0 |
| Tax |
(9,600) |
(16,030) |
(40.1) |
(11,950) |
(19.7) |
| Effective tax rate (%) |
17.7 |
22.1 |
|
22.0 |
|
| Reported PAT |
44,730 |
56,610 |
(21.0) |
42,360 |
5.6 |
| PAT margin (%) |
4.9 |
7.0 |
(212) bps |
5.0 |
(10) bps |
| Ann. EPS (Rs) |
55.2 |
69.2 |
(20.2) |
51.8 |
6.5 | Source: Company, India Infoline Research
Segmental performance
| Revenues (Rs mn) |
Q1 FY13 |
Q1 FY12 |
% yoy |
Q4 FY12 |
% qoq |
| Petrochemical |
218,390 |
183,660 |
18.9 |
214,120 |
2.0 |
| Refining |
853,830 |
736,890 |
15.9 |
762,110 |
12.0 |
| Oil and gas |
25,080 |
38,940 |
(35.6) |
26,090 |
(3.9) |
| EBIT margins (%) |
Q1 FY13 |
Q1 FY12 |
bps yoy |
Q4 FY12 |
bps qoq |
| Petrochemical |
8.0 |
12.1 |
(402) |
10.2 |
(211) |
| Refining |
2.5 |
4.3 |
(182) |
2.2 |
29 |
| Oil and gas |
38.8 |
37.8 |
93 |
36.5 |
231 |
| EBIT contribution (%) |
Q1 FY13 |
Q1 FY12 |
bps yoy |
Q4 FY12 |
bps qoq |
| Petrochemical |
36.0 |
32.1 |
386 |
45.0 |
(905) |
| Refining |
44.1 |
46.4 |
(232) |
35.1 |
895 |
| Oil and gas |
19.9 |
21.4 |
(145) |
19.7 |
22 |
| Revenue contribution (%) |
Q1 FY13 |
Q1 FY12 |
bps yoy |
Q4 FY12 |
bps qoq |
| Petrochemical |
19.9 |
19.1 |
76 |
21.3 |
(145) |
| Refining |
77.6 |
76.6 |
102 |
75.8 |
180 |
| Oil and gas |
2.3 |
4.0 |
(177) |
2.6 |
(32) | Source: Company, India Infoline Research
Refining segment
Reliance Industries Ltd (RIL) reported GRMs of US$7.6/bbl in Q1 FY13 as against US$10.3/bbl in Q1 FY12 and US$7.6/bbl Q4 FY12. The GRMs were better than our estimates of US$7/bbl. The out-performance was on the back of
1) Better control on feedstock cost on the back of further widening of processable crude window
2) Highest ever utilization of down stream units
a. Highest Ever Coker Utilization @ 4.8 MMT, facilitating heavy crude processing
b. Highest Ever FCCU Capacity Utilization @ 5.3 MMT
c. Highest Ever VGOHT Utilization @ 5.7 MMT
d. Highest ever Alky capacity utilization achieved @ 0.95 MMT
3) Maximized production of highest net back grades
4) Better marketing mix in terms of geographies as the company has shifted focus from US and EU to Asia and Middle East leading to savings in freight costs
|
|
|
|
|
|
|
|