Reliance Industries (Q1 FY15)

India Infoline News Service | Mumbai |

RIL reported GRMs of US$8.7/bbl in Q1 FY15 as against US$8.4/bbl in Q1 FY14 and US$9.3/bbl in Q4 FY14. The GRMs were above our estimates of US$8.5/bbl.

CMP Rs975, Target Rs1,200, Upside 23.1% 
  • Revenues at Rs963bn, higher by 9.9% yoy driven by strong growth in both refining and petrochemical segments aided by weak rupee
  • OPM falls by 26bps yoy and 94bps qpq; yoy fall was led by decline in contribution of E&P business and lower petchem EBIT margins, sequential fall was due to fall in EBIT margins of both refining and petchem segment
  • GRMs were at US$8.7/bbl was better than our expectations of US$8.5/bbl, GRMs saw 3.6% yoy rise while being lower by 6.5% qoq
  • Shale gas revenues and EBIDTA continue to rise sequentially
  • PAT at Rs56.5bn was better than our and street estimates owing to 1) better than expected refining segment performance and 2) lower than anticipated interest cost and depreciation
  • While we cut estimates, we maintain BUY rating with 9m TP of Rs1,200
Result table
(Rs m) Q1 FY15 Q1 FY14 % yoy Q4 FY14 % qoq
Net sales 963,510 876,450 9.9 951,930 1.2
Material costs (788,460) (729,830) 8.0 (798,590) (1.3)
Purchases (17,160) (3,920) 337.8 (130) 13,100.0
Personnel costs (9,290) (8,990) 3.3 (9,480) (2.0)
Other overheads (73,300) (62,960) 16.4 (60,420) 21.3
Operating profit 75,300 70,750 6.4 83,310 (9.6)
OPM (%) 7.8 8.1 (26) bps 8.8 (94) bps
Depreciation (20,240) (21,380) (5.3) (22,750) (11.0)
Interest (3,240) (8,100) (60.0) (7,990) (59.4)
Other income 20,460 25,350 (19.3) 20,360 0.5
PBT 72,280 66,620 8.5 72,930 (0.9)
Tax (15,790) (13,100) 20.5 (16,620) (5.0)
Effective tax rate (%) 21.8 19.7 22.8
PAT 56,490 53,520 5.5 56,310 0.3
PAT margin (%) 5.9 6.1 (24) bps 5.9 (5) bps
Ann. EPS (Rs) 69.9 66.3 5.4 69.7 0.3
Source: Company, India Infoline Research

Segmental performance
Revenues (Rs mn) Q1 FY15 Q1 FY14 % yoy Q4 FY14 % qoq
Petrochemical 237,150 219,500 8.0 243,430 (2.6)
Refining 909,980 814,580 11.7 876,240 3.9
Oil and gas 15,570 14,540 7.1 14,170 9.9
EBIT margins (%) Q1 FY15 Q1 FY14 bps yoy Q4 FY14 bps qoq
Petrochemical 7.9 8.6 (65) 8.6 (66)
Refining 4.1 3.6 52 4.5 (37)
Oil and gas 31.3 24.2 707 26.7 460
Revenue contribution (%) Q1 FY15 Q1 FY14 bps yoy Q4 FY14 bps qoq
Petrochemical 20.4 20.8 (45) 21.4 (103)
Refining 78.1 77.2 91 77.0 112
Oil and gas 1.3 1.4 (4) 1.2 9
EBIT contribution (%) Q1 FY15 Q1 FY14 bps yoy Q4 FY14 bps qoq
Petrochemical 30.4 35.8 (537) 31.6 (121)
Refining 60.9 55.9 494 59.7 122
Oil and gas 7.9 6.7 119 5.7 215
Source: Company, India Infoline Research



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