Reliance Industries Limited Valuation 9/9/2011 FinExpertise- Research & Analytics Analyst: Rajat Dhar Contact Details: Mobile + (91)-9999.760.359 E-Mail [email protected] Website: www.finexpertise.blogspot.com
Nov 28, 2014
Reliance Industries Limited Valuation
9/9/2011
FinExpertise- Research & Analytics Analyst: Rajat Dhar
Contact Details:
Mobile + (91)-9999.760.359
E-Mail [email protected]
Website: www.finexpertise.blogspot.com
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 2
Table of Contents
Section Page#
1
Review of Reliance Industries Limited. 2
A
Business / Segment Overview
B
Historical Stock Price Performance
2
Valuation - Reliance Industries Limited 8
A
Current Valuation
B
Historical & Projected Financial Review
3
Profile
12
A
Shareholding Pattern
B
Management Profile
4 Contact Details & Disclaimer 16
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 3
1. Review of Reliance Industries Limited
A. Business Overview
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 4
Snapshot of Reliance Industries Limited
(in INR Mn)
Key Financial Indicators
2008 2009 2010 2011
2012 (E) 2013 (E) 2014 (E)
Revenue 13,92,694.6 14,63,280.7 20,03,997.9 25,86,511.5
31,44,832.7 38,23,672.5 46,49,045.7
EBITDA 3,37,817.8 3,05,690.4 4,35,377.1 5,47,850.2
6,64,319.6 8,05,549.7 9,76,804.4
EBIT 2,89,346.4 2,53,737.5 3,30,411.8 4,11,774.4
4,90,067.6 5,83,247.1 6,94,143.5
EPS 127.76 99.57 63.30 79.16
94.25 112.21 133.60
DPS 13.0 13.0 7.0 8.0
10.71 12.75 15.18
Reliance Industries Limited Reliance Industries Limited, together with its subsidiaries, engages in the exploration, development, and production of oil and gas in India
and internationally. It also produces and markets petrochemical products, such as polyethylene In addition, the company involves in refining
petroleum products. Further, it offers chemicals, such as linear alkyl benzene; and polyester and fibre intermediates, such as paraxylene.
Additionally, the company produces textiles, such as suitings, shirtings, readymade garments. It also operates retail stores, including food and
grocery specialty stores; mini hypermarkets; hypermarkets; electronics specialty stores; Apple stores; apparel specialty stores; health,
wellness, and pharma specialty stores; footwear specialty stores; jewellery specialty stores.
Petrochemicals (24.5%) Refining (67.5%) Oil & Gas (5.7%) Others (2.3%)
SEZ Development
Retail Business
Textile
Marketing
Production
Exploration
Marketing
Production
Marketing
Production
Source: Company Filings
Source:, Analyst’s estimates, Company Filings
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 5
RIL – Segment Contribution (in Revenue)
Segment Revenue
(in INR Mn)
2007 2008 2009 2010 2011 CAGR
Petrochemicals 5,23,138.9 5,44,471.0 5,64,496.9 5,91,068.4 6,76,485.0 6.6%
Refining 6,58,929.4 8,39,118.0 9,14,561.7 13,60,682.5 18,65,416.8 29.7%
Oil & Gas 20,430.0 23,941.4 34,887.3 1,17,740.4 1,57,055.8 66.5%
Others 22,519.4 1,812.7 43,939.2 47,779.4 64,760.2 30.2%
Segment Contribution (y-o-y)
2007 2008 2009 2010 2011
Petrochemicals 42.7% 38.6% 36.2% 27.9% 24.5%
Refining 53.8% 59.5% 58.7% 64.3% 67.5%
Oil & Gas 1.7% 1.7% 2.2% 5.6% 5.7%
Others 1.8% 0.1% 2.8% 2.3% 2.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0.0%
20.0%
40.0%
60.0%
80.0%
2007 2008 2009 2010 2011
Petrochemicals Refining Oil & Gas Others
-------------------LHS------------------ ---------------RHS---------------- Segment-wise Growth Rate
2007-08 2008-09 2009-10 2010-11
Petrochemicals 4.1% 3.7% 4.7% 14.5%
Refining 27.3% 9.0% 48.8% 37.1%
Oil & Gas 17.2% 45.7% 237.5% 33.4%
Source:, Company Filings
Source: Company Filings
Source: Analyst’s deductions, Company Filings
Segment-wise performance over the years shows that the
%age share of Oil & Gas and Refining in the RIL’s revenue
basket has grown consistently over the years, from 1.7% &
53.8% in 2007 to 5.7% & 67.5% respectively in 2011.
Business units categorized under ‘Others’ have also
increased from 1.8% in 2007 to 2.3% in 2011.
However, the share of Petroleum in the RIL’s revenue
basket has reduced from 42.7% in 2007 to 24.5% in 2011.
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 6
1. Review of Reliance Industries Limited
B. Historical Stock Price Performance
& Projections
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 7
Indexed Stock Price Performance
Indexed Comparison Graph
Stock Projections
(INR in Mn) 2007 2008 2009 2010 2011 CAGR 2012 (E) 2013 (E)
EPS 88.68 127.76 99.57 63.30 79.16
91.69
94.25 112.21
DPS 11 13 13 7 8
0
10.71 12.75
Payout Ratio 12.40% 10.2% 13.1% 11.1% 10.1%
11.4%
11.4% 11.4%
P/E 15.45 17.63 15.29 16.98 13.28
15.73
Dividend Yield (%) 0.80% 0.58% 0.85% 0.65% 0.76%
Share Price (ending March-
xx) 1370.3 2252.7 1522.1 1074.5 1051.55 -6.4% 1482.18 1764.65
0.0
50.0
100.0
150.0
200.0
250.0
Daily: Feb 9, 2007 - Sept 9, 2011
RIL BSE
Source : BSE
Source: Analyst’s estimate, Company Filings
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 8
2. Valuation - Reliance Industries Limited
A. Current Valuation
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 9
Current Valuation – RIL
(INR in Mn except per share data)
Stock Price
Current Value
Selected Balance Sheet Items (31/03/2011)
Stock Price(9/9/11)
825.1
Fully Diluted Shares
3,287.17
Cash
2,71,348.60
52 Week High 1,187
Equity Value
27,12,246.55
Total Debt
6,73,814.60
52 Week Low 713.6
Enterprise Value
31,22,734.65
Shareholders' Equity
15,15,403.20
%(52-Wk
High)
Enterprise Value Multiples P/E Multiple
M.Cap Enterprise Sales EBITDA EBIT PE
CMP Value FY11 FY12(E) FY13(E) FY11 FY12(E) FY13(E) FY11 FY12(E) FY13(E) FY11 FY12(E) FY13(E)
825.10 70%
27,12,246.55
31,22,734.65 1.21x 0.99x 0.82x 5.70x 4.70x 3.88x 7.58x 6.37x 5.35x 10.42x 8.75x 7.35x
Analyst Estimates
Revenue
Net Income
EBITDA
EBIT
2012(E)
31,44,832.7
5,99,334.8
6,64,319.6
4,90,067.6
2013(E)
38,23,672.5
7,28,706.5
8,05,549.7
5,83,247.1
2014(E) 46,49,045.7 8,86,004.2 6,94,143.5 6,94,143.5
Source: Analyst’s estimates
Source: Analyst’s estimates
Source: BSE, Bloomberg, Company Filings, Analyst’s Deductions
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 10
2. Valuation - Reliance Industries Limited
C. Historical & Projected Financial
Review
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 11
RIL – Historical & Projected Financial Review
(INR in Mn) 2007 2008 2009 2010 2011 CAGR 2012 (E) 2013 (E)
Total Assets (Mn)
8,77,697
10,73,678
11,68,131
16,31,307
18,05,048
19.8%
Revenue
11,83,537
13,92,695
14,63,281
20,03,998
25,86,512
21.6%
31,44,833
38,23,672
Total Assets Turnover 1.35x 1.30x 1.25x 1.23x 1.43x
PAT
1,28,911
1,85,724
1,57,531
2,06,970
2,59,012
19.1%
5,99,335
7,28,707
Net Profit Margin 10.9% 13.3% 10.8% 10.3% 10.0%
11.1%
11.1% 11.1%
Annual Rate of Growth in EBIT N/A 41.0% -12.3% 30.2% 24.6%
19.0%
Annual Rate of Growth in EBITDA N/A 33.3% -9.5% 42.4% 25.8%
21.3%
Annual Rate of Growth in PAT N/A 44.1% -15.2% 31.4% 25.1%
19.1%
Annual Rate of Growth in Diluted EPS N/A 44.1% -22.1% -36.4% 25.1%
18.0%
Annual Rate of Growth of o/s Shares N/A 0.0% 8.8% 106.7% 0.1%
EPS 88.68 127.76 99.57 63.30 79.16
91.69
94.25 112.21
DPS 11 13 13 7 8
10.71 12.75
Payout Ratio 12.4% 10.2% 13.1% 11.1% 10.1%
11.4%
11.36% 11.36%
P/E 15.45 17.63 15.29 16.98 13.28
15.73
Dividend Yield (%) 0.80% 0.58% 0.85% 0.65% 0.76%
Share Price (ending March-xx)
1,370.30
2,252.70
1,522.10
1,074.50
1,051.55
1,482.18
1,764.65
Source: Analyst’s analysis, Company Filings
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 12
3. Profile - Reliance Industries Limited
A. Shareholding Pattern
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 13
Shareholding Pattern
Promoter & Promoter Group Public Non Institution Body Corporate
Indian Foreign
Institution FII DII
1,46,39,23,695 -
92,15,67,453 56,87,23,600 35,28,43,853 88,83,20,480 15,92,98,436
Percentage Break-Up (Over All) Percentage Break-Up (Public)
33.6%
42.3%
20.4%3.7%
Promoter & Promoter Group Public
Non Institution Body Corporate
50.0%
30.9%
19.1%
Institution FII DII
Source: Annual Report 2010-11
Source: Company Filings Source: Company Filings
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 14
4. Profile - Reliance Industries Limited
B. Management Profile
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 15
Board Composition
Promoter Director
Mr. Mukesh D Ambani, CMD
Executive Directors
Mr. Nikhil R. Meswani
Mr. Hital R. Meswani
Mr. P M S Prasad
Mr. Pawan Kumar Kapil
Non-Executive Non-Independent
Directors
Mr. Ramniklal H. Ambani
Mr. Hardev Singh Kohli
Independent Directors
Mr. Mansingh L. Bhakta
Mr. Yogendra P. Trivedi
Dr. Dharam Vir Kapur
Mr. Mahesh P. Modi
Prof. Ashok Mishra
Prof. Deepak C. Jain
Dr. Raghunath A. Mashelkar
Source: Annual Report 2010-11
September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com
FinExpertise – Research & Analytics. .All Rights Reserved. Page 16
Contact Details
Analyst : Rajat Dhar
FinExpertise
For more copies or other information, contact
Institutional/Retail: Rajat Dhar Phone: + (91) 9999.760.359 E-mail: rajat.dhar1yahoo.com
Blog: www.finexpertise.blogspot.com
FinExpertise, 3rd Floor, Malviya Nagar, New Delhi 110 017.
Disclaimer
This Report is based on data publicly available or from sources considered reliable by the Analyst. However, the Analyst does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not
responsible for any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are subject to change without any prior notice. Opinions expressed herein are our current opinions as
on the date of this Report. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. Analyst especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This document does not constitute an offer or solicitation for the purchase or sale of any
financial instrument or as an official confirmation of any transaction. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The
views expressed may not be suitable for all investors. This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is
a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Research
Analyst to any registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes, should inform themselves about and observe, any such restrictions.
The information given in this document is as of the date as mentioned in the report and there can be no assurance that future results or events will be consistent with this information. This information is subject to
change without any prior notice. Analyst reserves the right to make modifications and alterations to this statement as may be required from time to time. However, the Analyst is under no obligation to update or keep the information current. Nevertheless, the Analyst is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specific client
queries. The Analyst shall not be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Past
performance is not necessarily a guide to future performance. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the market, subject company or companies and its or their securities.
Copyright (c) 2011 Rajat Dhar