4QFY11 results in line. RIL reported PAT of `53.8bn, up 14% yoy. GRMs was slightly lower at US$9.2/bbl (we estimate US$9.5-10/bbl) due to: i) 6-week shutdown of RIL's FCC unit at its DTA refinery; ii) gas imbalance in the refinery due to the shutdown leading to higher LNG imports; iii) lower LPG and pet-coke cracks; iv) impact of linkage of RIL's crude contracts with Brent.
E&P - Mixed bag. Management has not given any guidance for the D6 gas ramp-up, but has guided for EBITDA of US$2bn from FY15 on account of its US shale gas ventures.
Change in estimates. We cut out FY12e and FY13e EPS 3% each as we reduce our D6 gas production to 50mcmd and 70mcmd from 60mcmd and 80mcmd respectively.
Valuation and risks. Despite strong revival in refining margins and strengthening polyester margins, the stock underperformed the market by 16% in the past year due to lack of clarity on D6 gas ramp-up. Though we trim our target price to `1,240/share from `1,250, we maintain Buy as the stock does not factor in positives of the refining & petchem businesses. Clarity on: i) D6 gas ramp up and ii)capex plans for deployment of huge cash generation are key stock triggers. Risks: lower refining & petchem margins and volumes; lower crude & natural gas prices and volumes.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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