25 July 2015
1QFY16 Results Update | Sector:
Oil & Gas
Reliance Industries
BSE SENSEX
28,112
Bloomberg
Equity Shares (m)
M.Cap (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val/Vol ‘000
Free float (%)
S&P CNX
8,522
RIL IN
3,234.0
3,314.9/51.8
1143 / 797
9/-12/-29
3613/3766
54.8
CMP: INR1,025
TP: INR983 (-4%)
Neutral
Reliance Industries’ (RIL) reported marginally above estimate 1QFY16 EBITDA at INR93.1b
(24% YoY and 8% QoQ), while PAT was in-line at INR63.2b (12% YoY and 1% QoQ) led by
higher depreciation and lower other income. EBITDA beat was led by higher GRM at
USD10.4 (v/s est 9.5). On telecom, apart from the business opportunity for data growth,
RIL shared key service offerings and infrastructure status. While telecom developments
will be keenly watched, recent fall in GRM is a near term concern and 3QFY17 off-gas
cracker start has delayed full upside from the core projects to FY18.
Financials & Valuation (INR Billion)
Y/E Mar
Sales
EBITDA
Adj. PAT
EPS (INR)
EPS Gr.(%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
Estimate change
TP change
Rating change
2015 2016E 2017E
3,29 3,102 3,470
1
316. 356.3 455.0
0
227. 248.6 296.7
2
77.6
84.8 100.0
3.3
738.
11.0
10.2
14.6
1.4
9.4
809.7
11.0
10.2
13.4
1.3
19.4
885.8
11.9
11.2
11.3
1.2
GRM surprise; Petchem inline:
1QFY16 GRM at USD10.4/bbl (+20% YoY, +3% QoQ)
was boosted by gasoline and lower energy costs. Refining EBIT stood at INR51b
(+36% YoY, +9% QoQ). Petchem EBIT at INR25b (+30% YoY, +16% QoQ) was
supported higher polymer margins with EBIT margin at 12.6% and higher volumes.
KG-D6 gas production remained flat at ~11.4mmscmd.
Core project commissioning from 4QFY16; telecom capex to cross INR1t
RIL telecom capital commitment reached USD15b in 1QFY16.
Expect Reliance
JIO to disrupt data as well as voice market given its non-legacy infrastructure and
zero dependence on voice revenue.
Core USD17b capex largely are on track.
We believe that the economics of new
projects targeted to tackle high energy costs (petcoke gasification, ethane
sourcing) could see some profitability moderation in low oil price era.
Shale gas EBIT negative:
CE is at USD8.6b, and plans to spend USD0.8b in FY16.
Production was flat QoQ and low gas prices have led to a loss at EBIT level.
Pipeline stake sale to bring in USD1b for RIL.
Consolidated net debt increased QoQ
to INR834b from INR764b in FY15.
Started 450 petroleum retail outlets
(320 in 4QFY15) and to reach 1,400 by end-
FY16. Ruled out setting up of pipelines citing costs and land acquisition delays.
Organized retail
reached 2,747 stores in 210 cities. Sales at INR47b (+17% YoY, -
2% QoQ), EBITDA of INR2b (+17% YoY, flat QoQ) and EBITDA margin of 4.3%.
Valuation and view:
Large non-core investments even if accretive over long-term;
gains will be backended, diluting overall return ratio in the interim. On FY17E basis,
the stock trades at 10.2x adj. EPS of INR100 and EV/EBITDA of 7.9x. SOTP-based
target price stands at INR983/share. Neutral.
FY15
2Q
3Q
964.9
802.0
-7.0
-22.5
82.4
72.1
8.5
9.0
4.9
-5.4
22.3
21.1
7.6
8.8
21.4
24.0
73.9
66.2
16.5
15.4
22.3
23.2
57.4
50.9
4.6
-7.7
19.7
17.4
FY16
2QE
3QE
742.0
767.1
-23.1
-4.3
83.9
86.4
11.3
11.3
1.8
19.9
22.5
23.4
6.2
6.5
21.5
21.1
76.7
77.7
17.6
17.9
23.0
23.0
59.0
59.8
2.8
17.6
20.2
20.5
(INR Billion)
FY15
FY16
4QE
934.9
66.8
90.8
9.7
5.3
23.7
6.5
23.0
83.7
19.2
22.9
64.5
3.3
22.1
3,290.8
-15.6
316.0
9.6
2.4
84.9
23.7
87.2
294.7
67.5
22.9
227.2
3.4
77.7
3,102.1
-5.7
354.2
11.4
12.1
92.2
25.1
83.8
320.7
74.1
23.1
246.5
8.5
84.3
Quarterly Performance (Standalone)
Y/E March
Net Sales
Cha nge (%)
EBITDA
% of Net Sa l es
Cha nge (%)
Depreci a ti on
Interes t
Other Income
PBT
Ta x
Ra te (%)
Adj. PAT
Cha nge (%)
Adj. EPS (INR)
1Q
963.5
9.9
75.3
7.8
6.4
20.2
3.2
20.5
72.3
15.8
21.8
56.5
5.5
19.3
4Q
560.4
-41.1
86.3
15.4
3.6
21.3
4.0
21.3
82.3
19.8
24.1
62.4
10.9
21.4
1Q
658.2
-31.7
93.1
14.1
23.6
22.7
6.0
18.2
82.6
19.5
23.5
63.2
11.8
21.6
Harshad Borawake
(HarshadBorawake@MotilalOswal.com); +91 22 3982 5432
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Reliance Industries
Exhibit 1: RIL segment wise performance snapshot (standalone)
In INRb
4Q 1Q
Segmental Revenues
Petchem
184 211 198 214 218 221
Refining
737 681 767 762 854 839
Oil & Gas
39 36 28 26 25 23
Others
2
5
2
3
2
2
Total
962 932 996 1,005 1,100 1,084
Segmental EBITDA
Petchem
27 29 27 28 22 22
Refining
43 42 28 27 33 46
Oil & Gas
31 28 22 19 18 16
Total
99 98 73 66 73 83
EBITDA Margin (%)
Petchem
14.6 13.9 13.8 13.2 10.3 9.8
Refining
5.8 6.1 3.7 3.6 3.8 5.5
Oil & Gas
79.2 79.6 76.5 73.7 72.5 68.9
Total
10.3 10.6 7.3 6.5 6.6 7.7
Segmental EBIT
Petchem
22 24 22 22 18 17
Refining
32 31 17 17 22 35
Oil & Gas
15 15 13 10 10
9
Others
0
0
0
0
0
0
Total
69 70 51 48 49 62
EBIT Margin (%)
Petchem
12.1 11.5 10.9 10.2 8.0 7.9
Refining
4.3 4.5 2.2 2.2 2.5 4.2
Oil & Gas
37.8 43.0 45.7 36.5 38.8 38.4
Others
3.4 2.0 4.3 2.7 0.4 4.8
Total
7.2 7.5 5.2 4.8 4.4 5.7
Operating Metrics
Refining (USD/bbl)
RIL GRM
10.3 10.1 6.8 7.6 7.6 9.5
Singapore GRM
8.6 9.1 7.9 7.5 6.7 9.1
Premium
1.7 1.0 -1.1 0.1 0.9 0.4
Ref. thr'put (mmt)
17.0 17.1 17.2 16.3 17.3 17.6
Utilization (%)
110 110 111 105 112 114
Petrochemicals
Total Prodn (mmt)
5.5 5.7 5.5 5.5 5.6 5.5
Polymer (TMT)
1,091 1,134 1,146 1,084 1,101 1,101
Polyester (TMT)
411 414 415 422 415 420
Polyest. Int. (TMT)
1,212 1,188 1,200 1,200 1,203 1,197
E&P
Gross Oil Production (kbd)
PMT
33.0 30.4 29.3 26.8 26.4 25.0
Yemen (stake sold)
4.3 4.3 4.3 3.9 5.0 5.0
KG-D6
11.7 15.2 15.2 13.2 12.6 9.2
Total
49.0 49.9 48.9 43.9 44.0 39.2
Gross Gas Production (mmscmd)
PMT
11.8 11.5 10.9 10.8 9.9 9.3
KG-D6
48.6 45.3 41.0 35.5 33.0 28.5
Total
60.4 56.8 51.9 46.2 42.9 37.8
Gross (mmboe)
40.3 38.2 35.2 31.4 29.4 26.0
Net (mmboe)
29.1 26.1 18.3 16.2 15.0 13.1
FY12
1Q 2Q 3Q
FY13
2Q
3Q
4Q
1Q
FY14
2Q 3Q
4Q
1Q
FY15
2Q 3Q
FY16 1QFY16 (%)
4Q 1Q YoY QoQ
-17.6 -2.5
-32.6 26.1
-22.9 -1.9
1.6 -44.0
-29.3 17.1
28.1 11.2
30.2 8.9
-32.3 -2.7
21.8 8.8
221 222 220 249 253 243 237 249 213 201 196
866 779 815 975 954 876 910 918 732 486 614
19 16 15 15 17 14 16 14 13 12 12
2
4
6
3
2
4
2
2
4
4
2
1,108 1,020 1,055 1,241 1,227 1,138 1,165 1,183 962 703 823
27
47
13
87
25
46
10
81
24
40
9
73
31
43
8
83
27
42
10
79
28
50
9
87
26
46
10
82
32
47
8
88
29
40
8
78
30
54
7
91
33
59
7
99
12.1 11.5 11.1 12.5 10.6 11.6 11.0 13.0 13.8 14.9 17.0
5.5 5.9 5.0 4.4 4.4 5.7 5.0 5.1 5.5 11.2 9.7
70.0 60.9 58.9 57.1 59.3 62.9 65.3 61.2 58.1 57.8 57.3
7.9 8.0 6.9 6.7 6.5 7.7 7.0 7.4 8.1 13.0 12.1
19
36
6
1
62
19
35
5
0
59
19
30
4
1
53
25
32
4
0
61
21
31
5
1
59
21
40
4
2
66
19
38
5
1
62
24
38
3
1
66
22
32
3
1
57
21
47
2
1
71
25
51
1
1
77
30.4 15.8
36.3 8.8
-83.0 -49.4
21.2 -49.2
25.0 8.5
8.8 8.6 8.6 10.1 8.4 8.6 7.9 9.6 10.3 10.6 12.6
4.2 4.5 3.6 3.3 3.3 4.5 4.1 4.1 4.4 9.7 8.4
30.7 28.8 24.2 24.3 31.2 26.7 31.3 24.1 19.8 13.4 6.9
43.8 13.4 13.6 12.7 45.0 50.5 26.9 29.9 19.8 35.4 32.1
5.6 5.8 5.0 4.9 4.8 5.8 5.3 5.6 6.0 10.2 9.4
9.6 10.1 8.4 7.7 7.6 9.3 8.7 8.3 7.3 10.1 10.4 19.5 3.0
6.5 8.7 6.6 5.4 4.3 6.2 5.8 4.8 6.3 8.6 8.0 39.0 -7.0
3.1 1.4 1.8 2.3 3.3 3.1 2.9 3.5 1.0 1.5 2.4 -18.8 60.8
17.5 16.1 17.1 17.7 17.0 16.3 16.7 17.3 17.7 16.2 16.6 -0.6 2.5
113 104 110 114 110 105 108 112 114 105 107
-0.6 2.5
5.5 5.4 5.3 5.7 5.6 5.4 5.4 5.7 5.3 5.6 5.8
7.4 3.7
1,098 1,100 1,100 1,093 1,196 1,111 1,082 1,191 993 1,034 1,080 -0.2 4.4
365 430 411 528 272 419 411 405 577 454 512 24.6 12.8
1,200 1,170 1,100 1,304 1,154 1,212 1,156 1,158 1,318 1,246 1,452
25.6 16.5
23.9 20.4 20.5 20.3 23.5 20.0 23.1 20.2 20.1 18.9 17.8 -22.9 -5.8
-
-
-
-
-
-
-
-
-
-
- n.a. n.a.
7.4 7.2 6.6 5.8 5.7 7.8 6.8 6.5 6.5 6.7 5.5 -19.4 -17.6
31.3 27.7 27.1 26.1 29.1 27.8 29.9 27.7 28.6 28.6 28.3
-0.9 -0.9
8.9
24.0
32.9
22.4
11.3
7.6 7.7 7.4 7.3 6.4 7.1 6.3 6.6 6.4 5.8 -18.1 -9.4
19.2 14.8 14.0 12.4 13.7 13.1 12.5 11.8 11.5 11.5 -12.1 0.0
26.8 22.5 21.4 19.7 20.1 20.1 18.8 18.5 17.9 17.3 -14.2 -3.4
18.4 15.8 15.0 14.3 14.4 14.8 13.8 13.7 13.3 13.0 -12.6 -2.9
9.1 7.6 7.2 6.7 7.0 6.9 6.5 6.3 6.1 5.9 -14.5 -3.3
Source: Company, MOSL
25 July 2015
2

Reliance Industries
Exhibit 2: Refining share in overall standalone EBIT remains high led by higher GRM in 1QFY16
(%)
Others
10 12 15 11
9 8
23 26 30 29 32 28 24 23 21 22 25 20 20 14
Petrochem
Refining
E&P
7
6
9
6
8
5
5
2
1
56 52 53 60 61 57 56 66 66
35 44
59 52 45 47 29 28 28
38 37 46 44 33
58 58 59
34 34 36
41 48 46 42 38 34 36 38 39 32 34 42 45 36
41 36 32
31 36 40
30 36 38 30 32
28 31 32 36
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Source: Company, MOSL
Key Takeaways from Analyst Meet
Telecom Business:
Telecom capex stands at ~INR920b including spectrum
payables and easily cross INR1t soon. Management gave detailed presentation
on its telecom venture in terms of opportunity and its planned service offerings.
While RIL has technically met all the rollout obligations, it is currently doing pilot
runs and plans to launch the business by end-2015.
Petroleum Marketing:
RIL has reopened its 450 (v/s 320 in 4QFY15) along with 8
terminals. It plans to service it outlets through coastal route and through rail
and roadways. Given the high costs and issues in land acquisition RIL has ruled
out any possibility of setting up any product pipelines
New Projects Update:
RIL has spent ~70% of the planned USD17b capex (this
number was USD16.5b earlier) on its four key projects (petcoke gasification,
polyester expansion, off-gas cracker and ethane sourcing).
Petcoke gasification: to commission in phases from 4QFY16
PX: In 4QFY16
Off-gases cracker : 3QFY17 (delayed by 6 months from original target)
Utilities: 2HFY16
It seems to have preponed its ethane sourcing project by ~6 months and expects
its US terminal to start by 2Q/3QCY16.
Domestic E&P:
RIL seems to had a headway on the testin issue with DGH and
has now commenced DST testing in few wells. It will try to maintain KG-D6
production.
Shale Gas:
RIL has significantly cut down the opex I the US shale, however could
not avoid loss in 1QFY16. Opex reduction is trough renegotiating with the
contracts, trying to reach more horizontal distance apart from focusing on the
liquid rich area to improve realizations.
Retail:
Plans to use Reliance Digital store format to improve the availability of
the 4G LTE smartphones after it launches its telecom business.
25 July 2015
3

Reliance Industries
Key financial highlights
1QFY165 interest cost is up 84% YoY and 48% QoQ to INR4b (v/s estimate of
INR7.3b) led by INR/USD depreciation duing the quarter. Adjusting for Its
capitalized interest of INR4.8b and forex loss of INR2.9b, RIL’s implied interest
rate in FY15 stood 3.2%.
Exhibit 3: Reported interest cost implies gross level interest cost of 3.2% in 1QFY16 v/s 3% in FY15
On standalone basis (INRm)
Interest Expenses (A)
Other borrowing costs (B)
Applicable loss on foreign currency
transactions/translation ('C)
Reported Interest cost = (A + B + C)
Interest Capitalized (D)
Gross interest cost (E) = (A + B + D)
Standalone Gross Debt (F)
Average interest rate (%) = (E) / avg (F)
FY11
21,250
200
1,830
23,280
4,740
26,190
FY12
19,660
180
6,830
26,670
4,300
24,140
FY13
21,520
160
8,680
30,360
3,850
25,530
FY14 1QFY15 2QFY15 3QFY15 4QFY15
18,670
3,240
3,830
4,380
4,080
140
13,250
32,060
7,010
25,820
-
-
3,240
1,830
5,070
3,750
7,580
1,850
5,680
4,430
8,810
3,000
7,380
(40)
4,040
3,940
8,020
FY15
15,530
-
8,140
23,670
10,620
26,150
2,860
5,970
4,800
7,910
1QFY16
3,110
673,970 682,590 724,270 899,680 840,000 840,000 880,000 980,000
4.0%
3.6%
3.6%
3.2%
2.3%
2.7%
3.4%
3.4%
840,000 1,020,000
3.0%
3.2%
Source: Company, MOSL
Other income
at INR18.2b (v/s INR20.5b in 1QFY15 and INR21.3b in 4QFY15)
was lower than our estimate of INR21b as RIL shifted its some part of its fixed
deposits in the banks to mutual funds where gains are not on accrual basis .
D,D&A
was up 12% YoY and 6% QoQ to INR22.7b led by increase in E&P.
Effective tax rate
stood at 23.5% in 1QFY16 (v/s 22.9% in FY14).
Standalone net debt
stood at INR210b (v/s INR200b in FY15) led by gross debt
of INR1,020b (v/s INR980b in FY15), and cash and equivalents at INR810b (v/s
INR780b in FY15).
Consolidated net debt
stood at IN834b (v/s INR764b in FY15) led by gross debt
stood of INR1,708b (v/s INR1,609b in FY15) and cash and equivalents of INR874b
(v/s INR845b in FY15).
Consolidated capex in 1QFY16 stands at INR350b (v/s INR1t in FY15) which
includes INR150b towards refining and petchem and INR150b towards telecoms.
Exhibit 4: Bulk of cons. and SA debt differential explained by shale gas and telecom debt
INR b
SA Net Debt
Cons. Net Debt
764
406 423
250
495
348
117
-20
FY10
FY11
FY12
200
54
18
45
210
586
834
-105
FY13
FY14
Sept-15
Mar-15
Jun-15
Source: Company, MOSL
25 July 2015
4

Reliance Industries
Exhibit 5: Shift of cash & equivalents to more towards mutual funds reduced interest income
Oth. Inc. (INRb)
OI as % of PBT
42
35
31
25
14
32
22
26
Net OI as % of PBT
38
30
33
36
26
23
21
15
22
23
16
4 4 5 6
(2) (2) (0)
0
2
2
2
3
5
(2)
2
3
1
(7)
2
7 10 7
11
15 13
5
14 15 15
10 11 12 11 12
7
6
3
3 2 3 1
(0)
1
6
5
6
7
7
7
30 28
18
21 20
28 28 29
24
19
18 22
17
9 11 11 17 23 19 21 17 22 25 21 23 20 20 21 24 21 18
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
1QFY08
1QFY09
1QFY10
1QFY11
Source: Company, MOSL
Exhibit 6: RIL SA net debt increased QoQ led by high capex intensity in new projects (INRb)
Net Debt / (Cash)
Cash & Cash equiv.
Gross Debt
803 840 813
900
840 840 880
1,020
980
739 728 713 700
560
263 286
374 380
316 365
285
251 221 194 160
625
219
734 682 702
264
294 318
674 670 714
424 458
745
683 732 701 723 724
76 55 80
33 46 67
229 240 248 289 319 300 275 489 508 519 540 406 470 388 384 250 213 99
615 745
703 707 792 810
25
830 931 905 887 882 785 795
752
780 810
18 55 45 128 200 210
-91 -87 -105-128 -66 -74
1QFY14
1QFY15
1QFY16
Source: Company, MOSL
0 -20
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
Exhibit 7: SA and Cons BS: Higher consolidated debt led by borrowings for Shale gas and Telecom
In INRb
FY10 FY11
Shareholder Funds
1,372 1,515
Total Debt
625
674
Deferred tax Liability
109
116
Total Liabilities
2,106 2,305
NFA + CWIP
Investments
Net Current Assets
Total Assets
Net Debt
Standalone Balance Sheet
FY12 FY13 FY14 Sept-15
1,661 1,800 1,971
2,083
684
724
855
797
121
122
122
124
2,466 2,646 2,948
3,004
1,644
892
468
3,004
45
Mar-15
2,162
891
127
3,180
1,903
1,126
151
3,180
200
FY10
1,416
646
107
2,169
1,772
131
265
2,169
423
Consolidated Balance Sheet
FY11 FY12 FY13 FY14 Sept-15 Mar-15
1,550 1,702 1,830 1,996 2,131 2,215
802
831
893 1,338 1,330 1,487
111
116
116
119
124
130
2,463 2,649 2,839 3,454 3,585 3,833
1,863
216
383
2,463
348
1,642 1,834
386
428
621
576
2,649 2,839
117
54
2,329
613
511
3,454
2,717
655
213
3,585
3,229
765
-161
3,833
1,654 1,555 1,215 1,289 1,511
232
377
540
525
861
220
373
712
832
576
2,106 2,305 2,466 2,646 2,948
406
250
-20
-105
18
495
586
764
Source: Company, MOSL
25 July 2015
5

Reliance Industries
Exhibit 8: Comparing consolidated and standalone segmental EBIT: Shale EBIT turns negative
INR Billion
Segmental Revenues
Petchem
Refining
E&P
Org. Retail
Others
Total
Segmental EBIT
Petchem - Cons. includes Recron
Malaysia
Refining - Cons. Includes GAPCO
E&P - Cons. includes US shale
business with 1 quarter lag
Org. Retail
Others
Total
Segmental Capital Employed
Petchem
Refining
E&P
Org. Retail
Others
Unallocated
Total
Consolidated Financials
1QFY15 4QFY15 1QFY16
254.0
980.8
31.8
40.0
17.7
1,324.3
18.6
38.1
10.4
0.8
1.2
69.2
481
722
638
59
486
1,148
3,534
217.5
564.4
25.1
47.9
28.3
883.3
20.0
49.0
4.9
1.0
3.2
78.2
465
925
719
62
689
1,129
3,989
208.6
687.3
20.6
47.0
25.8
989.2
23.4
52.5
0.3
1.1
2.3
79.7
484
936
735
63
720
1,178
4,116
Standalone (SA) Financials
1QFY15 4QFY15 1QFY16
237.2
910.0
15.6
1.9
1,164.6
18.9
37.7
4.9
200.6
486.4
12.2
-
3.5
702.7
21.2
47.3
1.6
-
1.2
71.4
438
909
316
-
453
1,184
3,300
195.5
613.6
12.0
2.0
823.1
24.6
51.4
0.8
Cons. less SA
1QFY15 4QFY15 1QFY16
16.8
70.8
16.2
40.0
15.8
159.7
(0.2)
0.4
5.6
0.8
0.6
7.2
17.0
78.1
12.9
47.9
24.8
180.6
(1.2)
1.8
3.3
1.0
2.0
6.8
13.1
73.7
8.6
47.0
23.8
166.2
(1.2)
1.1
(0.5)
1.1
1.7
2.2
0.5
62.0
450
709
291
-
386
1,161
2,997
0.6
77.5
461
921
324
-
454
1,218
3,378
31
27
22
12
16
16
347
404
411
59
62
63
101
235
266
(13)
(55)
(40)
537
689
738
Source: Company, MOSL
New projects commissioning to start from end FY16; capex up marginally
Cumulatively RIL has spent ~70% of the USD17b (v/s USD16.5b estimated in
4QFY15) core refining and petchem project capex.
RIL commissioned 1,150 KTA Phase 1 PTA plant and 650KTA PET resin plant in
April 2015. Phase 2 of PTA plant will be commissioned after six months.
While polyester expansion is already in process of phased commissioning,
Petcoke gasification will start commissioning in 4QFY16 and off-gases cracker is
delayed to 3QFY17 (disclosed in AGM).
In the Ethane sourcing project, RIL expects the ships to be ready by October
2016 and first ship will be loaded in early 2017.
Exhibit 9: New projects to drive RIL’s next growth phase; capex estimate increase marginally
Project
Off-gases cracker
Integrated gasification combined
cycle (IGCC)
Polyester expansion
Ethane sourcing
Total
Capex (USD b)
~4.8
~4.8
Feedstock’s
Refinery off-gases
(From CDU, FCC etc.)
Petcoke
(From delayed coker unit)
Key products
Petrochemicals (mainly ethylene chain)
Petrochemicals, Power, Steam, Chemicals
~5
1.5
~17.0
PX, PFY, PSF, PET
Replacing domestic gas and high cost propane/naphtha
25 July 2015
6

Reliance Industries
Exhibit 10: Status update of ongoing core business capex plans
In KTPA
Refinery Off-gas Cracker
Ethylene
Propylene
LDPE
LLDPE
Benzene
PP
Polyesters
PFY
PTY
PSF
PET
Polyester Intermediates
Paraxylene
PTA
MEG
Rubber Division
PBR
SBR
Butyl Rubber
HPIB
Current Capacity Planned Expansion
1,883
759
190
928
419
2,100
670
153
692
290
1,830
2,050
733
74
1,365
154
400
550
453
135
395
140
346
648
1,890
2,296
730
40
150
100
105
Total
3,248
913
590
1,478
872
2,235
1,065
293
1,038
938
3,720
4,346
1,463
114
150
100
105
Status / Likely production start
3QFY17 (v/s 4QFY16 earlier) , disclosed in AGM
3QFY17 (v/s 4QFY16 earlier) , disclosed in AGM
3QFY17 (v/s 4QFY16 earlier) , disclosed in AGM
3QFY17 (v/s 4QFY16 earlier) , disclosed in AGM
Along with PX line
4QFY16
Commissioned
Commissioned
Phase 1 commissioned; Phase 2 in Dec 2015
Phase 1 in 2H2015 and Phase 2 after 4QFY16
Phase 1 commissioned; Phase 2 after 6 months
4QFY16, in interim could purchase feedstock
Commissioned in 4QFY14
July-Sept 2014 (2QFY15)
Commissioning by 2016
Source: Company, MOSL
25 July 2015
7

Reliance Industries
JIO: Enhanced Visibility on business model and infrastructure
Capex till date stands at ~INR920b, expects launch by end 2015
Telecom Analyst:
Shobhit Khare
(Shobhit.Khare@MotilalOs
wal.com);
+91 22 3982 5428
Apart from the business opportunity for data growth, RIL shared key service
offerings and infrastructure status for Reliance JIO:
Confident of providing voice through VoLTE/VoWiFi:
JIO will depend on Voice
over LTE (VoLTE) and Voice over WiFi (VoWiFi) to provide voice services to its
subscribers and already has interconnect agreements in place for the same.
Assuming that JIO is able to ensure good coverage, quality and handset
availability for VoLTE, this will be a significant negative for existing incumbents
who derive ~75% of revenue from voice services. Apart from the pan-India 2,300
MHz spectrum, JIO has either 1,800MHz or 800 MHz spectrum in 20/22 circles
which would be used for coverage requirements.
Infrastructure Status:
Total number of cell sites (eNodeB) at launch are
expected to be ~75,000 with ~30,000 own sites. This compares with ~116,000
sited for IDEA and ~147,000 sites for BHARTI which also include ‘capacity sites’
apart from ‘coverage sites’. JIO has a fiber network of 250,000 Route km vs
197,000 Route km for BHARTI and 95,000 Route km for IDEA.
Device strategy:
JIO is working on open market as well as self branded 4G
devices and catalyzing the market to ensure that 4G as well as VoLTE become
default features in the Indian market. The company notes that China has gone
from nil to 84% smart phones being on LTE over the past 18 months.
While it’s difficult to comment on profitability, we expect Reliance JIO to disrupt
data as well as voice market given its non-legacy infrastructure and zero
dependence on voice revenue.
Exhibit 11: Reliance Jio: Planned ecosystem approach to develop digital services
Source: Company, MOSL
25 July 2015
8

Reliance Industries
Exhibit 12: China has gone from nil to 84% smart phones being on LTE over the past 18
months
Source: Company, MOSL
Exhibit 13: Summary of RIL strategy
Source: Company, MOSL
25 July 2015
9

Reliance Industries
REFINING: GRM surprise, EBIT at INR47b (66% of overall EBIT)
GRM at USD10.4/bbl; premium to Singapore at USD2.4/bbl
RIL’s 1QFY16 GRM at USD10.4/bbl (est USD9.5/bbl) were a surprise given that
the benchmark cracks (except gasoline) were down QoQ and even crude price
average (which impacts fuel & loss component) was higher. RIL management
attributes performance to higher gasoline cracks, continued lower energy costs
and favorable crude differentials.
Exhibit 14: Refining EBIT up 36% YoY and 9% QoQ led by higher GRM and lower opex
Refining EBIT (INRb)
EBIT Margins (%)
26 23 26 28 30 28 19 20 13 13 14 20 20 22 24 25 32 31 17 17 22 35 36 35 30 32 31 40 38 38 32 47 51
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Exhibit 15: 1QFY16 GRM at USD10.4/bbl; premium of USD2.4/bbl (USD/bbl)
In USD/bbl
Singapore GRM
Premium / (Disc)
RIL GRM
5.9
1.7 1.0
1.4
1.5 2.4
0.4
3.1
3.1 2.9
4.4
0.1 0.9
1.8 2.3
3.5 1.8
6.4
3.5 1.0
2.6 2.4 3.7
3.3
3.4
9.5
2.8 4.0
8.6 8.0
8.6 9.1 7.9 7.5 6.7 9.1 6.5 8.7 6.6
7.4
6.4 7.7 7.0 8.1 5.8
5.5 4.1
5.4 4.3 6.2 5.8 4.8 6.3
4.9 4.9 4.2 5.5
3.6
3.2 1.9
-1.1
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
7.2
7.7 8.5 7.6
7.6
Exhibit 16: Refinery throughput down 1% QoQ, utilization at 107%
Utilization (%)
109 103 108 110 110 111 105 112 114 113 104 110 114 110 105 108 112 114 105 107
101 107 108 108
77
16.7
16.9
16.7
1QFY11
16.7
16.0
17.1
17.6
16.1
17.5
Refinery Thr' put (mmt)
97 98 92 98 99 99 95 95
8.0
8.1
7.6
8.1
8.1
8.2
7.9
7.9
15.6
12.0
16.3
17.7
16.3
17.3
16.6
17.0
1QFY12
17.2
17.3
1QFY13
17.1
1QFY14
17.0
16.7
1QFY15
16.2
17.7
16.6
1QFY16
1QFY08
1QFY09
1QFY10
Source: Company, MOSL
Refining outlook:
Recent GRM uptick was more driven by the higher gasoline
cracks than overall margin improvement across the products. Nevertheless, the
crude price fall has improved the product demand outlook and should match
the capacity additions only in the near term. Over the medium to long terms we
expect margins to remain range bound as capacity additions though delayed will
eventually come in and match the demand growth. We model in GRM of
10
25 July 2015

Reliance Industries
USD9/10.5/bbl in FY16/17 for RIL. Higher FY17 GRM is driven by petcoke
gasification project.
IEA: Refinery capacity adds in 2015-16 surpass “call on refinery capacity”
As per IEA (International Energy Agency), global refinery capacity is expected to
rise from 95mmbbl/d to 97.4mmbbl/d between 2014 and 2016, with net
increases of 1.1mmbbl/d in each of 2015 and 2016.
The largest increases over 2015-16 take place in the US and China, each with
0.9mmbbl/d, then in the Middle East and non-OECD Asia with 0.6mmbbl/d and
0.5mmbbl/d, respectively. Announced shutdowns reduce Europe and OECD Asia
Pacific capacity by 0.3/mmbbl/d and 0.5mmbbl/d, respectively.
IEA indicates that the global refinery capacity additions do not entirely meet
expected demand growth, as part of this demand will be met by supply
elements that bypass refineries: biofuels, NGLs (natural gas liquids: ethane,
propane, and butane) and refinery processing gains.
What remains to be
supplied by refineries can be defined as the “call on refining capacity”.
In 2015-16, net capacity additions will be more than needed, which will cause
the global utilization rate to decline and casts a doubt on the continuation of
recent unusually high refining margins.
Exhibit 18: IEA expects refining to be in overcapacity
Exhibit 17: IEA estimate of refinery additions
Source: IEA, July 2015
Source: IEA, July 2015
25 July 2015
11

Reliance Industries
Exhibit 20: Brent crude price was up 15% QoQ and down 43%
YoY to average USD62/bbl in 1QFY16 (USD/bbl)
Brent Crude Price (USD/bbl)
140
120
100
80
60
40
20
0
1QFY04 1QFY06 1QFY08 1QFY10 1QFY12 1QFY14 1QFY16
Exhibit 19: Only gasoline cracks up QoQ in 1QFY16 (USD/bbl)
20
10
0
(10)
(20)
(30)
(40)
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
Exhibit 21: Premium of Brent over WTI down QoQ to
USD4.3/bbl in 1QFY16
Brent less WTI (USD/bbl)
25
20
15
10
5
0
(5)
1QFY04 1QFY06 1QFY08 1QFY10 1QFY12 1QFY14 1QFY16
Exhibit 22: Arab Light-Heavy differential declined in 1QFY16
(USD/bbl)
In USD/bbl
10
8
6
4
2
0
(2)
1QFY04 1QFY06 1QFY08 1QFY10 1QFY12 1QFY14 1QFY16
Brent - Dubai
Arab L-H
Source: Bloomberg, Reuters, MOSL
Exhibit 23: RIL refining outlook: Expects demand to outpace refinery capacity additions
Source: Company
25 July 2015
12

Reliance Industries
PETCHEM: Inline; spreads strong (32% of total EBIT)
Capacity additions on track, shutdown driven polymer margin strength in
1Q should subsidy in 2Q
RIL 1QFY16 petchem EBIT stood at INR24.6b (+30% YoY, +16% QoQ).
1QFY16 domestic polymer demand stood at 16%% (PP: 13%, PE: 11% and PVC:
29%) and Polyester demand was at 2% (POY: -2%, PSF: 6% and PET: 9%). Double
digit polymer demand could also be due to re-stocking.
Petchem outlook:
On the polymer front, we expect margins to marginally
recede in 2Q, but would remain at respectable levels. Will have to watch out for
impact of shale based US capacity additions in the medium term. In Polyester,
while the demand scenario is contingent on China, PX supply disruptions will
boost integrated margins giving fillip to profitability in the near term.
Exhibit 24: EBIT up YoY and QoQ, but seem to be lagging headline margin trend, could be due to higher discounts
Petchem EBIT (INRb)
15.6
14.0
14.0
EBIT Margins (%)
12.6
10.310.6
9.6
17.718.0
16.5
14.814.615.214.4
13.914.4
12.111.5
12.213.1
10.910.2
10.410.6
8.0 7.9 8.8 8.6 8.6
10.1
8.4 8.6 7.9
25 21
24 26 22 24 22 22
21 19 24 22 21 25
18 20 18 15 16 19 17 17 21 22 21 22 21 22
18 17 19 19 19
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Source: Company, MOSL
Exhibit 25: Polymer spreads improve meaningfully QoQ; polyester increase remains subdued (INR/kg)
75
60
45
30
15
0
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
PE
PP
PVC
POY
PSF
Source: Company, MOSL
25 July 2015
13

Reliance Industries
Exhibit 26: Petchem volumes up QoQ and YoY (mmt)
4.8 5.0 4.8 5.1
1.2 1.2 1.1 1.2
0.4 0.4 0.4 0.4
0.8 0.8 0.9 0.9
1QFY08
Total
5.8
5.4 5.5 5.3
5.4 5.6 5.2 5.5 5.7 5.5 5.5 5.6 5.5 5.5 5.4 5.3 5.7 5.6 5.4 5.4 5.7 5.3 5.6
5.0 5.0
4.9
4.6 4.7 4.9
1.3
1.3 1.2 1.5
1.2 1.2 1.1
1.1 1.2 1.1 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.1
1.2 1.2 1.2 1.2
1.1
1.2 1.2
1.1
1.1 1.1
0.4 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.3 0.4 0.4 0.4 0.6 0.5 0.5
0.4 0.4 0.4 0.4 0.4
1.2 1.1 1.1 1.2 1.0 1.0 1.1
0.8 0.8 0.7 0.7 0.8 1.1 1.1 1.1 0.9 1.1 1.1 1.0 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Polymer
Polyester
Polyester Interm.
1QFY09
Source: Company, MOSL
Exhibit 27: Expects new capacity additions to get absorbed by incremental demand
Source: Company, MOSL
25 July 2015
14

Reliance Industries
E&P: KG-D6 production flat, shale reports loss
Domestic E&P program contingent on gas pricing and DGH approvals
Domestic E&P EBIT stood at just INR0.8b (v/s INR4.9b in 1QFY15 and INR1.6b in
4QFY15, now contributes ~1% to the total EBIT v/s peak of 32% in 1QFY11)
impacted by higher depreciation.
Domestic conventional E&P has made some headway with RIL now moving
ahead with DST (well testing) as per DGH requirement. Expects to submit FDP
for CB-10 block by 2QFY16 (refer exhibit ‘Exhibit 29: Status of RIL's key blocks’
for more details). Incremental capex commitment will depend on outcome of
ongoing arbitration and gas pricing for deepwater discoveries.
CBM project on track for 2016 start:
Expects the 302km Shahdol - Phulpur
pipeline to complete by 3QFY16. Phase -1 activities are near completion which
includes >200 wells and 8 gas gathering stations.
To maintain KG-D6 production:
KG-D6 gross production averaged 11.4mmsmcd
in 1QFY16 (v/s 13.1mmscmd in 1QFY15 and flat QoQ). Post the commissioning
of two booster compressor pumps, RIL is trying to revive some wells so as to
maintain the production. Side Track options in MA to augment production are
being reviewed.
Exhibit 28: CBM development in full swing: Expect first gas by mid-FY16 (GGS: Gas gathering station)
Source: Company, MOSL
25 July 2015
15

Reliance Industries
Exhibit 29: E&P EBIT down QoQ led by higher depreciation (%)
E&P EBIT (INRb)
56
63
64
54
51
69
59
64
54
42 42 39 41 40 36 38 38
4346
36 39 38
EBIT Margin (%)
31 29
3 4 4 4 5 6 6 5
1QFY08
1QFY09
10 12
19
15 17 17 15 16 15 15
24 24
31
27
31
24
20
13
7
10 10 9
6 5 4 4 5 4 5 3 3 2 1
1QFY13
1QFY14
1QFY15
1QFY16
13
1QFY10
1QFY11
1QFY12
Source: Company, MOSL
Exhibit 30: KG-D6 gross production averaged 11.5mmscmd in 1QFY16
KG-D6 Gross Oil (kbpd)
KG-D6 Gross Gas (mmscmd)
0 0
11 10 15 25 22 22 22 12 15 15 13 13 9 7 7 7 6 6 8 7 7 7 7 5
5 6 9
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Source: Company, MOSL
Exhibit 31: RIL’s net HC production at 5.9mmboe
RIL net Oil + Gas production (mmboe)
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
Source: Company, MOSL
25 July 2015
16

Reliance Industries
Exhibit 32: Status of RIL's key blocks: New development and production contingent on arbitration
Key Blocks
Current Status
KG-D6
Development plan approved for R-
(KG-DWN-98/3)
Series in Aug-13 and FEED completed
FY14
Update / Planned Work Program
FY15
FY16
FY17
Development contingent on the
arbitration decision and new gas pricing
applicability
Sidetrackin
g of few
closed wells
FY18
FY19
Production start likely
(contingent on
development start)
D1-D3: FEED completed for booster MA8H well began Installed
compressor and detailed engineering production in Jan- compressor
in process
14 at ~2.5mmscmd boosters
Satellite fields - DoC review for D29, FDP likely to be
D30, D31 (Satellite) being pursued
submitted
FDP likely to be DST in discoveries D29 & D30 being
approved
undertaken; first step towards designing
an integrated development plan,
Development contingent on the
arbitration decision and new gas pricing
applicability
MJ-1 discovery (Appraisal plan
First appraisal well Drilled 3rd
Data
reviewed by MC)
spud in Sep-13
appraisal well, processing,
study
engg studies
and analysis
underway
of well data
underway
NEC-25
- Integrated development plan for D- Submitted
FDP likely to be To do DST in Developme Development Production
D32
nt likely
start likely
(NEC-OSN-97/2)
32, D-40, D-9 and D-10 disc.
proposal to carry approved
likely
discovery in
submitted.
out DST to DGH
2QFY16
CY-D5
- DoC for D35 (A1) discovery
Reported 2nd
(CY-DWN-
submitted in March 2010; await DGH discovery
2001/2 )
approval.
KG-V-D3
(KG-DWN-
2003/1)
CB-10
(CB-ONN-
2003/1)
CBM blocks
*MC: Management Committee; FDP: Field Development Plan
- Await DGH approval for DoC of D39
/ D41.
- Ph 1 upto Dec’14; identifying
locations
- Await DoC approval for 8
discoveries
RELINQUISHED
Entry into
Expect FDP
Phase II
submission
discussion with by 2QFY16
DGH underway
Development Production
start likely
Source: Company, MOSL
Shale Gas EBIT turns negative; completes pipeline asset sale
RIL’s shale gas revenues stood at USD141m (-48% YoY, +2% QoQ), while EBITDA
stood at USD86m (-57% YoY, -5% QoQ).
RIL’s production share in shale JV’s stood at 15.3mmscmd (largely flat YoY and
QoQ).
Average realization stood at USD3.5/mscfe (v/s USD6.6/mscfe in 1QFY15 and
USD3.4/mscfe in 4QFY15.
Shale gas capex stands at USD8.6b (USD275m spent in 4QFY15) without
adjusting for recent pipeline sale. RIL expects FY16 capex at SD800-900m.
In 2QFY16 RIL completed the sale of its midstream asset (pipeline; RIL stake
49.9%) for INR1b of which USD574m is an upfront payment and USD499m To be
accounted in 2QFY16) will be paid before July 2016. Management indicated that
it has invested USD176m in this asset and the book value stood at USD320m.
Annual revenue loss will be ~USD65m and opex will increase for leasing the
same.
25 July 2015
17

Reliance Industries
Exhibit 33: Shale gas revenues down YoY and QoQ
Revenues (USDm)
193
155
215
165
193
127
EBITDA (USDm)
270
266
244
221
202 206
201
199
174
174
172
119
102
123
138
91
141
86
Source: Company, MOSL
Exhibit 34: Shale gas capex curtailed led by sharp hydrocarbon price fall
Capex (USDm)
40
170
20
520
130
250
70
221
185
1
181
145
20
263
137
1
200
139
20
158
157
-
110
181
1
208
96
5
138
98
Pioneer (RIL: 45%)
Carizzo (60%)
Cumulative Capex (USDm)
Chevron (RIL: 40%)
Total
6,000
6,460
6,834
7,133
7,468
7,759
8,064
8,298
8,573
67
28
147
2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16
*asset-wise capex not disclosed
Source: Company, MOSL
Exhibit 35: RIL production largely flat YoY and QoQ
Pioneer (RIL: 45%)
RIL Production Share (mmscmd)
11.7
11.2
9.9
1.7
8.7
2.0
1.7
1.5
1.3
2.7
2.9
2.3
1.7
1.6
7.4
7.2
6.8
6.6
5.9
11.4
13.2
2.0
3.4
7.8
13.9
2.3
3.5
8.1
Chevron (RIL: 40%)
Carizzo (60%)
15.1
3.0
3.5
8.6
15.0
2.4
3.6
9.0
16.1
2.7
4.1
9.2
Total
15.5
1.7
4.4
9.4
15.3
1.8
4.4
9.0
2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16
Source: Company, MOSL
25 July 2015
18

Reliance Industries
Organized Retail: 1QFY16 revenues up 17% YoY
Reached 210 cities with 2,747 stores
In 1QFY16, Reliance retail reported revenues of INR47b (+17% YoY, -2% QoQ),
EBITDA of INR2b (+17% YoY, flat QoQ) and EBITDA margin of 4.3% (v/s 4.5% in
FY15).
Same store sale growth stood at 13% across all formats.
It currently operates 2,747 stores (v/s 1,621 on March 31, 2015) in 210 cities
with 12.5m sq. ft of area.
It plans to enter into e-commerce segment along with offer market place
platform for small retailers.
Exhibit 36: Reliance retail has opened 126 stores in 1QFY16, increasing presence to 210 cities
No. of stores (No.)
Addition
No. of Cities
Avg. stores per city
FY12
1,282
142
86
15
FY13
1,466
184
129
11
FY14
1,691
225
146
12
1QFY15
1,723
212
148
12
2QFY15
2,006
437
155
13
3QFY15
2,285
279
166
14
4QFY15
1QFY16
2,621
2,747
336
126
200
210
13
13
Source: Company, MOSL
Exhibit 37: Focus on digital segment continues with store count reaching 1,298, ~ 47% of
total (# of stores)
Brands
Fashion and Lifestyle
Jewellery
Value and others
2,285
920
609
53
599
104
3QFY15
1,196
616
53
649
107
4QFY15
1,298
622
53
662
112
1QFY16
Digital
2,621
1,691
284
718
54
533
102
FY14
1,723
427
602
54
540
100
1QFY15
2,006
689
595
53
569
100
2QFY15
Total Stores
2747
1,466
139
760
51
448
68
FY13
Source: Company, MOSL
Exhibit 38: Revenues grew by 17% YoY (INRb)
Jewellery
Digital
Value & others
40
41
Fashion & Lifestyle
Brands
Total
48
47
Exhibit 39: Value format revenue share remains highest (%)
Jewellery
Brands
Fashion & Lifestyle
Value & others
Digital
47
22.8
0.8
8.4
5.6
1QFY15
22.8
0.8
9.5
5.8
23.9
0.9
11.2
7.0
25.8
1.0
12.2
5.6
24.4
0.9
11.7
7.5
1QFY16
55
2
19
12
12
1QFY14
57
2
22
14
5
53
2
21
13
11
56
1
19
12
12
57
2
21
14
6
1QFY15
55
2
23
14
6
51
2
24
15
8
55
2
26
12
5
52
2
25
16
5
1QFY16
Source: Company, MOSL
Source: Company, MOSL
25 July 2015
19

Reliance Industries
Valuation and view
RIL is in the midst of executing its largest ever capex plans in core and non-core
businesses. Large non-core investments though could be accretive from a long-
term perspective; the gains will be backended, diluting RIL’s overall return ratio
profile in the interim.
We expect the next earnings growth in RIL in FY17, when its large projects
commission and gas volumes increase. Till then, RoE will hover at ~12%.
Key things to watchout for RIL: (1) E&P arbitration case outcome for domestic
E&P clarity, (2) Update on core capex plan of ~USD14b and (3) Update on
telecom foray.
For FY16/FY17, we model a) GRM at USD9/10.5/bbl. Every USD1/bbl change in
GRM impacts RIL’s EPS by ~10%.
On FY17E basis, the stock trades at 10.2x adj. EPS of INR100 and EV/EBITDA of
7.9x. SOTP-based target price stands at INR983/share. Neutral.
Exhibit 40: RIL: Key assumptions
Key Metrics
Exchange Rate (INR/USD)
Refining
Capacity (mmt)
Production (mmt)
Capacity Utilization (%)
GRM (USD/bbl)
Blended GRM
Singapore GRM
Premium to Singapore
E&P
Gas Production (mmscmd)
Oil Production (kbd)
Pricing
Brent Oil (USD/bbl)
Wellhead Gas Price (USD/mmbtu)
FY09
45.8
33.0
32.0
97%
12.3
5.8
6.5
FY10
47.6
62.0
60.6
98%
6.9
3.6
3.3
39.8
10.7
84.8
69.7
4.2
FY11
45.6
62.0
66.5
107%
8.4
5.2
3.2
56.2
18.9
86.5
4.2
FY12
47.9
62.0
67.6
109%
8.6
8.3
0.3
42.6
10.9
114.5
4.2
FY13
54.5
62.0
69.1
111%
9.2
7.9
1.4
26.5
9.1
110.6
4.2
FY14
60.5
62.0
68.0
110%
8.5
5.6
2.9
13.8
6.4
108.5
4.2
FY15E
61.2
62.0
68.8
111%
8.8
6.4
2.5
12.2
6.6
FY16E
64.0
62.0
68.0
110%
9.0
7.0
2.0
11.5
5.5
FY17E
65.0
62.0
68.0
110%
10.5
7.0
3.5
11.5
5.5
86.0
65.0
70.0
4.5
4.6
4.7
Source: Company, MOSL
Exhibit 41: RIL: Segmental EBIT break-up (INRb)
Segmental EBIT (INRb)
Refining
Petchem
E&P
Total
Segmental EBIT share (%)
Refining
Petchem
E&P
Total
FY09
96
69
23
188
51%
37%
12%
100%
FY10
60
86
55
200
30%
43%
27%
100%
FY11
92
93
67
252
36%
37%
27%
100%
FY12
97
90
53
239
40%
38%
22%
100%
FY13
128
73
29
230
56%
32%
13%
100%
FY14
132
86
20
239
55%
36%
9%
100%
FY15E
155
86
16
257
FY16E
176
101
7
284
FY17E
220
125
5
349
60%
62%
63%
34%
36%
36%
6%
2%
1%
100%
100%
100%
Source: Company, MOSL
25 July 2015
20

Reliance Industries
Exhibit 42: RIL: Sum of the parts valuation
Business
Core business
Refining
Petchem
E&P Initiatives
KG - D6 (KG Basin)
NEC - 25 (Mahanadi basin)
Sohagpur East & West (CBM)
PMT
Investment in Shale Gas
Investments
Investments in fuel Retailing
Investments in BWA
Reliance Retail
Less: Net Debt/ (Cash)
Total Base Value
USD b
45.4
26.1
19.3
3.8
1.8
0.3
0.3
0.6
0.6
6.3
0.5
1.8
4.1
7.7
47.8
INR b
2,726
1,565
1,161
228
109
17
21
36
45
380
30
105
244
463
2,870
Adj. INR/sh
933
536
397
78
37
6
7
12
15
130
10
36
84
159
983
Remarks/Methodology
EV @6x EBITDA, implied USD1573/complexity bpd
Core business EV @6x EBITDA
Includes KG-D6, NEC-25, CBM, KG-III-6 and Yemen block
DCF; 60% stake; 6tcf cumulative; model 4tcf yet to recover
DCF; 60% stake; OGIP of 3tcf
DCF; 100% stake; OGIP of 3.65 TCF, assumed 50% recovery
Currently producing; EV @2x EBITDA
JV with Atlas, Pioneer & Carrizo; valued at 0.8x equity investment
Includes Reliance Retail, RGTIL, RIIL and SEZ
25% discount to investments
25% discount to license value adjusted for elapsed time
100% subsidiary of RIL; 1x sales
Based on fully diluted equity sh. of 2,921m (excl 309m treasury sh.)
Source: MOSL
25 July 2015
21

Reliance Industries
Reliance Industries: Story in charts
Exhibit 43: RIL’s earnings growth momentum has slowed
down
Exhibit 44: Also return ratio’s declined significantly
PAT (INRb)
320
240
160
80
0
Rolling 3 Yr PAT CAGR (%)
45%
33%
21%
9%
-3%
24
18
12
6
0
RoE (%)
RoCE (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 45: FY14 Cons. Capital Employed: Higher share of non-core long gestation capex impacting RIL’s overall return ratios
Cons. CE Break-up (%)
1
8
18
10
4
4
2
-
2
5
2
23
22
35
18
FY10
29
16
FY11
8
26
4
2
6
7
8
27
13
FY12
9
28
4
2
6
10
6
22
14
FY13
9
25
2
2
12
12
6
19
14
FY14
8
21
2
1
15
13
5
23
12
FY15
8
19
2
1
16
13
6
23
12
FY16E
7
18
2
1
17
13
6
23
12
FY17E
7
17
2
1
18
13
7
22
12
FY18E
Source: Company, MOSL
Unalloc.
Cash & Equiv.
Retail
SEZ
Telecom
E&P (Shale)
E&P (Domestic)
Refining
Petchem
Exhibit 46: While core business RoCE would be healthy, subdues/nil returns in non-core businesses would drag overall
profitability (%)
Adj. ROIC (%)
30
20
10
-
(10)
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
FY18E
Petchem
Refining
E&P (Domestic)
E&P (Shale)
Retail
25 July 2015
22

Reliance Industries
Reliance Industries: Story in charts
Exhibit 47: E&P has been a dampener - despite cyclical
downturn Refining & Petchem benefited by INR depreciation
100%
75%
50%
25%
0%
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Source: Company, MOSL
Source: Company, MOSL
Refining
Petchem
E&P
Exhibit 48: Expect E&P production revival when its new
development projects commission (mmscmd)
60
45
30
15
Exhibit 49: RIL refining margins have been largely flat in
recent years (USD/bbl)
Singapore GRM
16
12
8
4
0
Premium/(disc)
RIL GRM
Exhibit 50: While, recent petchem EBIT margins are low, we
expect some recovery led by polymer chain (%)
15%
13% 13% 13%
11%
10%
8%
5%
FY04
FY06
FY08
FY10
FY12
FY14
FY16E
16% 15%
12%
11%
10%
11%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 51: Dividend Payout continues to remain low (%)
22%
20%
17%
15%
12%
FY03
FY05
FY07
FY09
FY11
FY13
FY15
Exhibit 52: RIL 1Yr Fwd P/E Chart (last 15 years)
32
24
16
8
0
11.813.3
10.7
11.1
P/E (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
Source: Company, MOSL
Source: Company, MOSL
25 July 2015
23

Reliance Industries
Financials and valuations
RIL - Income Statement
Y/E March
Net Sales
Change (%)
RM Cons & Purchases
Employee Costs
Other Expenditure
Change in Stocks
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate* (%)
PAT
Adj. PAT
Change (%)
Key Operating Metrics
GRM (USD/bbl)
KG-D6 production (mmscmd)
2011
2,482
28.9
1,947
26
160
-32
381
15.4
136
23
31
252
50
19.6
203
203
24.9
8.4
56.2
2012
3,299
32.9
2,763
29
180
-9
336
10.2
114
27
62
258
57
22.2
200
200
-1.2
8.6
42.6
2013
3,603
9.2
3,066
34
228
-33
308
8.5
95
30
80
263
53
20.1
210
210
4.8
9.2
26.5
2014
3,901
8.3
3,298
34
256
4
309
7.9
88
32
89
278
58
21.0
220
220
4.7
8.5
13.8
2015
3,291
-15.6
2,631
37
287
19
316
9.6
85
24
87
295
67
22.9
227
227
3.3
8.8
12.2
2016E
3,102
-5.7
2,345
37
363
0
356
11.5
92
25
84
323
74
23.0
249
249
9.4
9.0
11.5
(INR Billion)
2017E
3,470
11.9
2,496
40
479
0
455
13.1
130
32
93
386
89
23.1
297
297
19.4
10.5
11.5
(INR Billion)
2017E
33
2,596
2,628
1,076
141
3,845
3,387
1,437
1,950
309
1,203
Balance Sheet
Y/E March
Share Cap. (incl sh. Susp.)
Reserves
Net Worth
Total Loans
Deferred Tax
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets, L & Adv.
Inventory
Debtors
Cash & Bank Balance
Loans&Adv.and Other CA
Current Liab. & Prov.
Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
2011
33
1483
1,515
674
116
2,305
2213
785
1,427
128
377
2012
33
1628
1,661
684
121
2,466
2055
918
1,137
78
540
2013
32
1768
1,800
724
122
2,646
2132
1034
1,097
191
525
2014
32
1,939
1,971
855
122
2,948
2,226
1,132
1,094
417
895
2015E
32
2,129
2,162
976
127
3,265
2,361
1,215
1,146
758
1,126
2016E
32
2,340
2,373
1,076
133
3,582
2,501
1,307
1,194
942
1,172
298
174
271
171
360
184
396
257
427
119
495
330
429
107
332
402
366
47
116
421
358
72
100
436
377
80
217
451
497
46
373
2,305
442
43
712
2,466
495
43
832
2,646
686
42
542
2,948
651
63
236
3,265
622
69
275
3,582
663
78
384
3,845
25 July 2015
24

Reliance Industries
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Adj. EPS (ex Treasury)
Cash EPS
Adj. Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
Adj. P/E
Cash P/E
EV / EBITDA
EV / Sales
Adj. P/B
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (No. of Days)
Fixed Asset Turnover (x)
Leverage Ratio
Net Debt / Equity (x)
2011
62.0
68.4
103.5
511.2
8.0
13.7
16.5
15.0
9.9
9.5
1.5
2.0
0.8
14.8
12.9
21
1.1
0.2
2012
61.3
67.7
96.1
560.7
8.5
14.7
16.7
15.2
10.7
9.9
1.0
1.8
0.8
13.0
12.1
20
1.5
0.0
12.3
11.6
15
1.7
-0.1
2013
65.0
71.9
94.4
616.5
9.0
14.6
2014
68.0
75.2
95.2
674.2
9.5
16.4
15.1
13.6
10.8
10.9
0.9
1.5
0.9
11.7
11.1
11
1.8
0.0
2015E
70.2
77.6
96.4
738.5
10.0
16.7
14.6
13.2
10.6
11.2
1.1
1.4
1.0
11.0
10.2
8
1.4
0.1
2016E
76.8
84.8
105.2
809.7
10.9
16.6
13.4
12.1
9.7
10.3
1.2
1.3
1.1
11.0
10.2
7
1.3
0.1
2017E
90.6
100.0
130.3
885.8
12.9
16.7
11.3
10.2
7.9
7.9
1.0
1.2
1.3
11.9
11.2
8
1.2
0.1
Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation (excl. revaluation)
Interest expense
Direct Taxes Paid
(Inc)/Dec in Wkg. Capital
Interest/other income
Other op activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free Cash Flow
(Pur)/Sale of Investments
Interest/other income
Other In activities
CF from Inv. Activity
Change in Equity
Inc / (Dec) in Debt
Dividends Paid
CF from Fin. Activity
Inc / ( Dec) in Cash
Add: Opening Balance
Add: On Amalgamation
Closing Balance
E: MOSL Estimates
2011
252
136
23
-42
1
-26
-11
333
-121
212
-141
23
35
-203
2
30
-24
7
137
135
271
2012
258
114
27
-48
-28
-44
-8
270
-80
190
62
19
-31
-30
-2
-85
-28
-115
125
271
396
2013E
263
95
30
-47
58
-62
-7
330
-159
171
22
65
-75
-148
-31
-23
-29
-83
99
396
495
2014
278
88
32
-61
145
-65
4
422
-325
97
-120
68
-264
-640
2
84
-31
55
-163
495
332
2015
295
85
24
-61
83
-54
-19
353
-427
-74
-84
66
-115
-560
2
21
-33
-10
-217
332
115
(INR Billion)
2016E
323
92
25
-68
-54
-61
0
257
-324
-68
-46
61
0
-309
0
75
-38
37
-15
115
100
2017E
386
130
32
-82
7
-66
0
408
-253
155
-31
66
0
-218
0
-32
-41
-73
117
100
217
25 July 2015
25

Reliance Industries
Corporate profile
Company description
Reliance Industries Ltd (RIL), a Fortune 500 company, is
India's largest private sector entity, with a turnover of
USD66.8b and net profit of USD3.9b. Over the years, RIL
has grown through backward integration in energy chain
(textiles, petchem, refining and E&P) and is now moving
into new areas like organized retail and BWA. It operates
one of the largest refining capacity of 1.24mmbbl/d at a
single location and is the largest producer of polyester
fibre and yarn.
Exhibit 47: Sensex rebased
Exhibit 48: Shareholding pattern (%)
Jun-15
Promoter
DII
FII
45.2
12.6
22.3
Mar-15
45.2
12.6
22.0
Jun-14
45.3
10.9
23.3
20.5
Exhibit 49: Top holders
Holder Name
Life Insurance Corporation Of India
Reliance Chemicals Limited
Reliance Polyolefins Limited
Abu Dhabi Investment Authority
% Holding
9.1
1.9
1.9
1.2
Others
19.8
20.2
Note: FII Includes depository receipts
Exhibit 50:
Top management
Name
Mukesh D Ambani
Designation
Chairman & Managing
Director
Exhibit 51: Board of director
Name
Mukesh D Ambani
Ashok Misra*
Dipak C Jain*
Dharam Vir Kapur*
Mahesh Prasad Modi*
Name
Mansingh Laxmidas Bhakta*
Raghunath Anant Mashelkar*
Yogendra Premkrishna Trivedi*
Nita M Ambani
PMS Prasad
*Independent
Exhibit 17:
Auditors
Name
Chaturvedi & Shah
Delloite Haskins & Sells
Rajendra & Co
Statutory
Statutory
Statutory
Type
Exhibit 18:
MOSL forecast v/s consensus
EPS (INR)
FY16
FY17
MOSL forecast
76.8
90.6
Consensus
forecast
77.5
94.7
Variation (%)
-1.0
-4.4
25 July 2015
26

Reliance Industries
NOTES
25 July 2015
27

This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed
Reliance Industries
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