Reliance Industries Ltd – The Goose With The Golden Eggs


Reliance Industries is making all the right moves to be a global leader in the core energy and materials value chain. The company is also the 2nd largest producer of Paraxylene globally. Reliance has convincingly geared up for its digital technology footprint in India. The company is future ready with 5G,6G services and beyond.

In the Indian equity market, Reliance Industries is the only Energy Company that has risen by 90% in the past one year. This massive growth has impacted the Nifty Energy sector too, as it has outperformed the benchmark Index by a 15% margin.

RIL as a company continues to benefit from integrated business model, wide product portfolio which provides high degree of earnings stability. It has built virtual floating ethane pipeline between North America and Dahej in Gujarat. And at Jamnagar its started to process the largest refinery off-gas cracker(ROGC) in the world. Reliance Retail has created the widest reach in the organised retail segment in India with 3,616 stores operational in 702 cities. RIL with its new venture JIO is present in all 29 states of India with direct physical presence in more than 18,000 urban and rural towns and over 2,00,000 villages. This capex across energy and materials businesses and digital services will significantly enhance Reliance’s cash flows and reduce volatility in earnings in the coming years.


Note:
Debt Equity – 238% (2016-17), 203% (2015-16) yoy basis has increased in the past two years due to the launch of Reliance Jio and Reliance trends the customer retail outlet. As it’s an expansion of business infrastructure which is a better prospect for the company in coming days ahead.

PEER COMPARISON
Market Capitalization and Weightage
RIL boasts of a market cap of 5.84 crore which is highest amongst its peers in the Energy sector. The company also wields a 49.22% weightage in the Nifty Energy Index. The company’s weightage in the Nifty Energy Index is by far the highest amongst its peers. The table below clearly indicates that RIL leads the pack in the Energy space.


Core Business And Performance
RIL stands out in the Energy space with a promising business model. The company is known for its Oil Refining business and has now advanced Internet infrastructure built by Jio and a robust physical retail business built by Reliance Retail. There is no company in the world with diversification ranging from retail, telecom, construction, textiles, etc.  NTPC Ltd, ONGC, Power Grid and IOC on the other hand are associated with the Energy segments only. It is important to note that RIL has outperformed the Nifty Energy Index as well as the benchmark Nifty Index in the last on year by posting 90% returns on a year on year basis.

Financial Report and GST Impact
 Reliance Industries (RIL) which reported its April-June 2017 numbers after 20th July it declared that net sales grew by only 6.5% and net profit growth remained flat. RIL accounts for nearly 40% of the aggregate revenue of the numbers declared so far. Similarly, its 36% growth in other income (including exceptional items) to Rs 3,225 crore is almost half of the combined other income of Rs 7,523.67 crore reported by the rest of the firms. There are nevertheless some encouraging signs.
Refining and Marketing segment EBIT increased by 6.5% y-o-y to a record level of 25,056 crore (US$ 3.9 billion), supported by higher Gross Refining Margin and crude throughput. GRM for the year stood at eight year high level of US$ 11.0/bbl as against US$ 10.8/ bbl in the previous year. RIL’s GRM outperformed Singapore complex margins by US$ 5.2/bbl, the highest premium achieved in the last eight years.
Though it was said that the GST would have a negative impact on the Oil & Gas sector but nothing much affected RIL as it grew it sales by 6.5%. Reliance Industries as a stock has doubled in a year’s time and has a greater potential to outshine its peers as well as become a Global leader in this industry.
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Reliance Industries is making all the right moves to be a global leader in the core energy and materials value chain. The company is also the 2nd largest producer of Paraxylene globally. Reliance has convincingly geared up for its digital technology footprint in India. The company is future ready with 5G,6G services and beyond.

In the Indian equity market, Reliance Industries is the only Energy Company that has risen by 90% in the past one year. This massive growth has impacted the Nifty Energy sector too, as it has outperformed the benchmark Index by a 15% margin.

RIL as a company continues to benefit from integrated business model, wide product portfolio which provides high degree of earnings stability. It has built virtual floating ethane pipeline between North America and Dahej in Gujarat. And at Jamnagar its started to process the largest refinery off-gas cracker(ROGC) in the world. Reliance Retail has created the widest reach in the organised retail segment in India with 3,616 stores operational in 702 cities. RIL with its new venture JIO is present in all 29 states of India with direct physical presence in more than 18,000 urban and rural towns and over 2,00,000 villages. This capex across energy and materials businesses and digital services will significantly enhance Reliance’s cash flows and reduce volatility in earnings in the coming years.


Note:
Debt Equity – 238% (2016-17), 203% (2015-16) yoy basis has increased in the past two years due to the launch of Reliance Jio and Reliance trends the customer retail outlet. As it’s an expansion of business infrastructure which is a better prospect for the company in coming days ahead.

PEER COMPARISON
Market Capitalization and Weightage
RIL boasts of a market cap of 5.84 crore which is highest amongst its peers in the Energy sector. The company also wields a 49.22% weightage in the Nifty Energy Index. The company’s weightage in the Nifty Energy Index is by far the highest amongst its peers. The table below clearly indicates that RIL leads the pack in the Energy space.


Core Business And Performance
RIL stands out in the Energy space with a promising business model. The company is known for its Oil Refining business and has now advanced Internet infrastructure built by Jio and a robust physical retail business built by Reliance Retail. There is no company in the world with diversification ranging from retail, telecom, construction, textiles, etc.  NTPC Ltd, ONGC, Power Grid and IOC on the other hand are associated with the Energy segments only. It is important to note that RIL has outperformed the Nifty Energy Index as well as the benchmark Nifty Index in the last on year by posting 90% returns on a year on year basis.

Financial Report and GST Impact
 Reliance Industries (RIL) which reported its April-June 2017 numbers after 20th July it declared that net sales grew by only 6.5% and net profit growth remained flat. RIL accounts for nearly 40% of the aggregate revenue of the numbers declared so far. Similarly, its 36% growth in other income (including exceptional items) to Rs 3,225 crore is almost half of the combined other income of Rs 7,523.67 crore reported by the rest of the firms. There are nevertheless some encouraging signs.
Refining and Marketing segment EBIT increased by 6.5% y-o-y to a record level of 25,056 crore (US$ 3.9 billion), supported by higher Gross Refining Margin and crude throughput. GRM for the year stood at eight year high level of US$ 11.0/bbl as against US$ 10.8/ bbl in the previous year. RIL’s GRM outperformed Singapore complex margins by US$ 5.2/bbl, the highest premium achieved in the last eight years.
Though it was said that the GST would have a negative impact on the Oil & Gas sector but nothing much affected RIL as it grew it sales by 6.5%. Reliance Industries as a stock has doubled in a year’s time and has a greater potential to outshine its peers as well as become a Global leader in this industry.
 
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