Trading Idea: RIL
CMP: 1041
Either sell below 1060-1070 or on rise around 1090-1110;
TGT: 1030*-1010-998-965*-945-930-910-885* (1-3/6M)
TSL> 1120
Note: Consecutive closing (3 days) above 1120 for any reason, RIL may further rally up to 1150*-1165-1190* and 1215-1250-1275* & 1290-1340-1410* in the near to long term (under alternative bullish case scenario).
RIL will publish its Q4FY16 result today and the consensus figures are (standalone):
PAT: Rs.7022 cr (YOY-6243; QOQ-7218)
EPS: 21.68 (YOY-19.30; QOQ-20.30)
FY16 PAT: Rs.27119 cr (FY15: 22719)
FY16 EPS: 83.78 (FY15 EPS: 70.20)
Expected YOY Growth: 19.37% (on the back of superior refining margin and improvement in petrochemical segment)
Expected Q4 GRM: 10.8 (QOQ-11.5)
All eyes will be also on the telecom ventures (R-Jio) and as par some estimates (SOTP), it may burn cash for RIL for the first few years and may have negative impact of around 250/- per share.
** RIL Q4FY16 result was slightly above street estimates, but QOQ Petrochem EBITDA fall and lack of clarity about R-Jio launches may keep the scrip under pressure.
Stand alone Q4FY16 EPS of RIL was at 22.60 against consensus of 21.67 (beat by 4.29%; YOY-19.30; QOQ-22.30).
Q4FY16 GRM was at 10.80 against median expectation of 10.80 (beat by 0%) and YOY-10.10 (+6.97%); QOQ-11.50 (- 6.09%).
Falling crude oil prices boosted margin for Petrochemical & refinery business. This along with incremental higher volumes, better GRM (YOY) and product delta helped 15.94% higher YOY & 1.48% QOQ growth in PAT.
Although consolidated Q4FY16 PAT was at Rs.7398, but it includes one time exceptional item of Rs.171 cr. So consolidated PAT of Rs.7227 (7398-171) beats estimates of Rs.6948 cr by around 4%.
In the R&M segment, Q4FY16 EBIT came around Rs.6394 cr, which was marginally lower on QOQ basis and the company is apprehending some tough import competition from the "Fly by night" producers from China in the months ahead (like steel).
The stand alone O&G business of RIL also reported loss as EBIT level due to lower realization and decline in production along with drop in oil prices for US shale production.
Looking ahead, Q1FY17 GRM now averaging around $5.2 against Q1FY16 average of around $7.7, RIL may report Q1FY17 GRM around $8.2-8.7, which may put some pressure on the scrip.
For RIL (Standalone basis):
Q4FY16 TTM EPS: 84.70 (FY16/Actual)
Projected FWD EPS: 97-111.15-127.25 (FY:17-19)
Average PE: 12
As par BG metrics and current market scenario:
Present median valuation of RIL may be around: 1015 (FY:16/TTM)
Projected fair valuations might be around: 1085-1160-1245 (FY:17-19/FWD)
** RIL Q4FY16 result was slightly above street estimates, but QOQ Petrochem EBITDA fall and lack of clarity about R-Jio launches may keep the scrip under pressure.
Stand alone Q4FY16 EPS of RIL was at 22.60 against consensus of 21.67 (beat by 4.29%; YOY-19.30; QOQ-22.30).
Q4FY16 GRM was at 10.80 against median expectation of 10.80 (beat by 0%) and YOY-10.10 (+6.97%); QOQ-11.50 (- 6.09%).
Falling crude oil prices boosted margin for Petrochemical & refinery business. This along with incremental higher volumes, better GRM (YOY) and product delta helped 15.94% higher YOY & 1.48% QOQ growth in PAT.
Although consolidated Q4FY16 PAT was at Rs.7398, but it includes one time exceptional item of Rs.171 cr. So consolidated PAT of Rs.7227 (7398-171) beats estimates of Rs.6948 cr by around 4%.
In the R&M segment, Q4FY16 EBIT came around Rs.6394 cr, which was marginally lower on QOQ basis and the company is apprehending some tough import competition from the "Fly by night" producers from China in the months ahead (like steel).
The stand alone O&G business of RIL also reported loss as EBIT level due to lower realization and decline in production along with drop in oil prices for US shale production.
Looking ahead, Q1FY17 GRM now averaging around $5.2 against Q1FY16 average of around $7.7, RIL may report Q1FY17 GRM around $8.2-8.7, which may put some pressure on the scrip.
For RIL (Standalone basis):
Q4FY16 TTM EPS: 84.70 (FY16/Actual)
Projected FWD EPS: 97-111.15-127.25 (FY:17-19)
Average PE: 12
As par BG metrics and current market scenario:
Present median valuation of RIL may be around: 1015 (FY:16/TTM)
Projected fair valuations might be around: 1085-1160-1245 (FY:17-19/FWD)
| RELIANCE | EPS(TTM) | BV(Act) | P/E(AVG) | Low | High | Median | 200-DEMA | 10-DEMA |
| Q4FY16/TTM | 84.7 | 667.09 | 12 | 995.53 | 1030.39 | 1012.96 | 975.08 | 1044.58 |
| FY17/FWD | 97 | 730.55 | 12 | 1065.36 | 1102.67 | 1084.02 | 975.08 | 1044.58 |
| FY18/FWD | 111.15 | 800.5 | 12 | 1140.42 | 1180.36 | 1160.39 | 975.08 | 1044.58 |
| FY19/FWD | 127.25 | 876.25 | 12 | 1220.22 | 1262.96 | 1241.59 | 975.08 | 1044.58 |
Analytical Charts:
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