Reliance Industries
Cluster: Evergreen
Recommendation: Buy
Price target: Under review
Current market price: Rs1,008
Q4FY2006 performance a positive surprise
Result highlights
- The Q4FY2006 net profit of Reliance Industries Ltd (RIL) grew by 9.2% year on year (yoy) to Rs2,502 crore, ahead of our expectations.
- The surprise was on account of the stronger-than-expected performance of the refining and marketing (R&M) business.
- During the quarter, the gross refining margins (GRMs) in the R&M business stood at a strong $10.4 per barrel (bbl), thereby outperforming the Singapore GRMs by $5.8/bbl.
- The petrochemical business also saw a strong momentum with the revenue and the profit before interest and tax (PBIT) growing by 17% and 51% respectively during the quarter.
- We believe that the R&M and petrochemical businesses are likely to see continued momentum over the next couple of years. The stock has well surpassed our price target of Rs870. We will review the same once we revise our numbers for FY2007 and take into account the numbers for FY2008.