CMP: INR1,077 TP: INR1,057 (-2%) Neutral

Transcription

1 BSE SENSEX S&P CNX 27,288 8,413 Bloomberg RIL IN Equity Shares (m) 3,242.4 M.Cap.(INRb)/(USDb) 3,520 / Week Range (INR) 1129 / 889 1, 6, 12 Rel. Per (%) -1/8/-11 Avg Val, INRm 3865 Free float (%) 54.9 Financials & Valuations (INR b) Y/E March E 2018E Net Sales 2, , ,756.6 EBITDA Net Profit Adj. EPS (INR) EPS Gr. (%) BV/Sh. (INR) RoE (%) RoCE (%) Payout (%) Valuations P/E (x) P/BV (x) EV/EBITDA (x) EV/Sales (x) Estimate change TP change Rating change 16 January 2017 Results Update Sector: Oil & Gas Reliance Industries CMP: INR1,077 TP: INR1,057 (-2%) Neutral Reliance Industries (RIL) reported standalone EBITDA lower than our estimates at INR106b (+3% YoY and flat QoQ) due to lower than estimated GRM and higher opex. PAT at INR80b (+11% YoY and +4% QoQ) was in line with our estimates due to higher other income and lower interest cost. Jio (telecom) has garnered 72.4m subscribers and commercial launch will depend on resolution of interconnect issues. Management guides for further delays in ROGC (mechanical completion by 1QFY18) and petcoke gasifier projects (mechanical completion by June 2017). Key drivers for stock performance in the near term would be core projects commissioning and subscriber ramp-up and ARPU in telecom. Marginal decline in EBITDA: Refining EBIT stood at INR61.3b (-3% YoY, +4% QoQ). GRM stood at USD10.8/bbl (-6% YoY, +7% QoQ). Petchem EBIT at INR33.6b (+30% YoY, -3% QoQ) with EBIT margin at 15.5% (16.3% in ) was lower QoQ primarily due to demonetization affecting demand. Expect further delay in gasifier; voice issue solution to decide Jio comm. launch ROGC by 1QFY18: ROGC has achieved 96% mechanical completion and is expected to be 100% complete by 1QFY18. Expect ramp up to start from 2QFY18. Petcoke gasifier is expected to be mechanically completed by June We expect another 3-6months for full utilization. Jio capex reaches INR 1.71t: Capex to date has reached INR1.71t. The company recently announced additional INR 300b. Jio s user base has reached 72.4m in December Commercial launch will be after resolution of voice interconnect issues. The company still sees 2-20% call failure. Domestic E&P continues to shrink: KG-D6 gas prodn at 7.5mmscmd (-30% YoY and -2.6% QoQ) and shale at 37.5bcfe (-31% YoY and -9.4% QoQ). KG field development is on cards but subject to arbitration resolution and plan approvals. capex at INR380b; cons. net debt at INR1,943b (vs INR1,804b in ). Valuation and view: On FY19E basis, the stock trades at 9.5x adj. SA EPS of INR113 and EV/EBITDA of 6.3x. Our SOTP-based fair value stands at INR1,057/share. Maintain Neutral. Standalone - Quarterly Earning Model (INR Million) Y/E March FY16 FY17 FY16 FY17E Var v/s 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE Est. Est. (%) Net Sales 658, , , , , , , ,122 2,331,580 2,376, , YoY Change (%) Total Expenditure 565, , , , , , , ,583 1,930,190 1,955, , EBITDA 93,070 98, , , , , , , , , , Margins (%) Depreciation 22,650 23,720 24,050 25,240 19,500 20,290 20,770 25,613 95,660 86,173 25, Interest 5,970 6,940 6,090 5,540 9,240 6,330 9,310 10,820 24,540 35,700 10, Other Income 18,180 16,170 22,890 18,580 20,330 22,800 30,250 25,844 75,820 99,224 22, PBT 82,630 83,840 95,470 95,070 99, , ,210 90, , , , Tax 19,450 18,230 23,290 21,870 24,280 24,690 25,990 20,009 82,840 94,969 25, Rate (%) Adj PAT 63,180 65,610 72,180 73,200 75,480 77,040 80,220 70, , ,681 80, YoY Change (%) Margins (%) Key Assumptions Refining throughput (mm GRM (USD/bbl) Petchem EBITDA/tonne ( Petchem volumes (mmt) E: MOSL Estimates Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com); Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on Bloomberg, Thomson Reuters, Factset and S&P Capital.

2 Exhibit 1: RIL segment wise performance snapshot (standalone) FY15 FY16 FY17 (%) In INRb 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q YoY QoQ Segmental Revenues Petchem Refining Oil & Gas Others Total 1,165 1, Segmental EBITDA Petchem Refining Oil & Gas Total EBITDA Margin (%) Petchem Refining Oil & Gas Total Segmental EBIT Petchem Refining Oil & Gas Others Total EBIT Margin (%) Petchem Refining Oil & Gas Total Operating Metrics Refining (USD/bbl) RIL GRM Singapore GRM Premium Refinery Thr' put (mmt) Utilization (%) Petrochemicals Polymer (TMT) 1,082 1,132 1,049 1,037 1,083 1,217 1,183 1,141 1,146 1,186 1, Polyester (TMT) Polyester Int. (TMT) 1,086 1,305 1,241 1,245 1,452 1,475 1,725 1,780 1,533 1,739 1, E&P Gross Oil Prodn (tmt) PMT KG-D Total Gross Gas Prodn (mmscmd) PMT KG-D Total Shale production (bcfe) January

3 Key takeaways from analyst meet REFINING/PETCHEM: GRM at USD10.8/bbl despite shutdown in FCCU There was a planned shutdown in FCCU unit as a result of which, production of petrol was affected. Despite that, the company was able to clock a GRM of USD 10.8/bbl, implying a premium of USD 4.1/bbl over SG GRM. Throughput stood at 17.8mmt (115% utilization) vs 18.0mmt in and each. In petchem, polymer demand was up +5% YoY in (PE: +8%, PP: +5%, PVC: +1%) while polyester was also encouraging at +5% YoY (PSF: -1%, POY: +0%, PET: +34%). Domestic demand of petrochem was adversely impacted because of demonetization. TELECOM: Capex of INR1.71t till-date Management guided that telecom launch is round the corner but exact date will be function of resolution of interconnect issues. RIL wants consumers to get adequate Jio experience and can even extend the trial offer if required. Currently customers are facing issues in voice connectivity with call failures of 2-20%. Capex (helped by INR490b debt) reached INR1.71t (v/s INR1.46t on September 2016). It has recently announced additional capex of INR 300b. Petroleum Marketing: 1,151 outlets opened so far RIL has reopened its 1,151 (v/s 950 outlets on March 2016). It guides reaching 1,400 by Mar The company had witnessed sharp fall in market share due to demonetization. It started giving a discount of INR1/lit which has been able to revert to the predemonetization market share. New Projects Update: further delay; no change in capex RIL s USD18.5b core projects (petcoke gasification, polyester expansion, off-gas cracker and ethane sourcing) are effectively delayed by ~6 months. (a) Petcoke gasification will be mechanically complete by June 2017 and fully commission by Jan 2018, (b) Off-gas cracker will be mechanically completed by 1QFY18 and be commissioned from 2QFY18. Ethane sourcing is on track. 100% utilization of new projects is now shifted to FY19. The company is also building facilities at Jamnagar, Nagothane and Hazira for feedstock flexibility. Domestic E&P: Development contingent on several factors KG-D6 production declines: KG-D6 gross production declined to 7.5mmsmcd in (v/s 10.7mmscmd in ).RIL is trying to sustain production through well optimization. Development of RIL s east coast fields R-series, MJ (D55) and D29/D30 will be contingent on resolution of arbitration cases and approvals. Optimistically production from R-series could start in CBM production likely in 2HFY17: Expects production start in. Currently de-watering wells and testing Shahdol - Phulpur pipeline. 16 January

4 Key financial highlights Interest expenses in stood at INR9.3b up 53% YoY and 47% QoQ. Other income at INR30.3b (v/s INR22.8b in and INR22.8b in ) exceeded our estimate of INR22b. D,D&A was lower at INR20.7b (-14% YoY, +2% QoQ). Effective tax rate stood at 24.5% in (flat QoQ). Consolidated debt stood at ~INR1,944b (v/s ~INR1,804b in ); cash and cash equivalents stood at ~INR764b (v/s ~INR899b in ). Exhibit 2: Refining share in overall standalone EBIT remains high at ~65% in Petrochem Refining E&P Others QFY10 2QFY10 3QFY10 4QFY10 Exhibit 3: Status update of ongoing core business capex plans In KTPA Current Capacity Planned Expansion Status / Likely production start Total Refinery Off-gas Cracker Ethylene 1,883 1,365 3,248 2QFY18 (v/s earlier) Propylene QFY18 (v/s earlier) LDPE QFY18 (v/s earlier) LLDPE ,478 2QFY18 (v/s earlier) Benzene Along with PX line PP 2, ,235 2QFY18 (v/s earlier) Polyesters PFY ,065 Commissioned PTY Commissioned PSF ,038 PET Phase 1 commissioned; Phase 2 in Dec 2015 Polyester Intermediates Paraxylene 1,830 2,470 4,300 Full commissioning by 3Q/4Q FY17 (v/s initial planned expansion of 1.9MMT) PTA 2,050 2,296 4,346 Commissioned MEG ,463 Rubber Division PBR Commissioned in SBR July-Sept 2014 () Butyl Rubber Commissioning by 2016 HPIB Petcoke Gasifier 8bcm/yr 8bcm/yr 3QFY18 16 January

5 Refer our detailed report on Telecom released in October 2016 JIO: Trial launch garners 16m subscribers, Capex at INR1.59t By 2020 if required capex can reach INR2.5t Mass Scale free welcome offer could continue until March 16 to attract subscriber growth towards the celebrated 100m mark, with RJio s indicative data pricing at INR /GB. Our key moniterable remains the Subscriber-ARPU mix, as subscriber churn and potential ARPU dilution post the welcome offer could change RJio s product offerings. Network investment may continue over the next 2-3 years with incremental investment of INR 1,000b over next four years. Healthy traction on Jio App could improve data adoption by early data users. We expect RJIo to reach 84m subscribers and ARPU of INR 251 by FY19E with EBITDA break even by FY20E. Telecom Analyst: Ali Asgar (Aliasgar.shakiri@MotilalOswal.com); Management commentary: Reached 72.4m subscribers; data rates trending towards USD 1/GB (INR 65-70) RJio reached 72.4 Mn subscriber base by Dec 16. Voice calling - While there is improvement, call failure rate still continue to hover at elevated level %. Data rates trending towards USD 1/GB (INR65-70). We believe higher usage may lead to ARPU accretion in the telecom market. Data congestion faced by 8% subscribers due to abnormally high data usage. Digital apps receiving ratings on Play stores. LTE Smartphones ecosystem fast emerging 80% of smartphones sold are LTE enabled in Dec 16 quarter. Out of phones above INR 6,000, 95% are LTE enabled handsets. Management did not comment on network coverage, capex outlook or potential offerings post the free usage period until 31 st March 17. Our expectation maintain FY20E EBITDA breakeven; DCF value at INR 19/share We have factored higher subscriber base of 75m and 99m for March 17 and March 18 with an ARPU of INR 200 for FY18E, once it starts charging. This should generate revenue base of ~INR210b in FY18E. The ARPU is about 15-20% premium to Bharti the leader in the market. RJio may reach about m by March 16; we assume potential churn of about 20-25% once the company starts billing subscribers, factoring 75m subscribers for March 17. We believe, RJio s target of wallet share will change the conventional telecom operator s volume/pricing offerings to subscriber/arpu dynamics. High subscriber base through low priced offering could offset ARPUs, keeping our revenue estimates of INR ~210b intact. We expect RJio to reach about 13% revenue market share in FY19E and third year EBITDA breakeven (FY20) with EBITDA of INR 27.5b in FY20. This works out to be about 7% project IRR and DCF based value of INR 19/share. 16 January

6 REFINING: Operating GRM in line; diesel cracks higher GRM at USD10.8/bbl; outlook positive Exhibit 4: RIL s premium over benchmark stood at USD4.1/bbl in 8 RIL's GRM premium over SG Brent less Dubai Arab L-H (2) Exhibit 5: Refining EBIT down 5.5% YoY and up +4% QoQ Refining EBIT (INRb) EBIT Margins (%) QFY10 2QFY10 3QFY10 4QFY10 Exhibit 6: GRM at USD10.8/bbl; premium of USD4.1/bbl Singapore GRM Premium / (Disc) RIL GRM (1.1) 1QFY10 2QFY10 3QFY10 4QFY10 16 January

7 Exhibit 7: Refinery throughput increased YoY to 17.8mmt, utilization at 115% Refinery Thr' put (mmt) Utilization (%) QFY10 2QFY10 3QFY10 4QFY Exhibit 8: RIL expects limited capacity supply and stable demand to support margins Source: Company 16 January

8 PETCHEM: In line; boosted by margins and domestic demand EBIT increased 30% YoY and -3% QoQ; EBIT share at 35% Exhibit 9: EBIT up 30% YoY and -3% QoQ; margins declined QoQ to 15.5% Petchem EBIT (INRb) EBIT Margins (%) QFY10 2QFY10 3QFY10 4QFY Exhibit 10: Key Polymer spread decreased QoQ ; POY/PSF spreads down 1.7%/1.6% QoQ in (INR/kg) PE PP PVC POY PSF QFY10 2QFY10 3QFY10 4QFY10 Exhibit 11: Petchem volume affected due to shutdown Polymer (mmt) Polyester (mmt) Polyester Interm. (mmt) QFY10 2QFY10 3QFY10 4QFY10 16 January

9 E&P: KG-D6 decline continues; shale outlook challenging Domestic E&P development contingent on arbitration resolution and development plan approvals Exhibit 12: E&P returns to profitability led by lower depletion E&P EBIT (INRb) (20) (27) 0 0 (2) (1) 1QFY10 2QFY10 3QFY10 4QFY10 Exhibit 13: KG-D6 gross production averaged 7.5mmscmd in KG-D6 Gross Oil (TMT) QFY10 2QFY10 3QFY10 4QFY10 16 January

10 Shale Gas profitability under pressure due to low prices RIL s shale gas revenues stood at USD92m (v/s 110 in ), while EBITDA stood at USD30m (v/s USD58m in ). RIL s production share in shale JV s stood at 37.5bcfe (v/s 54bcfe in ). Average realization stood at USD2.85/mscfe (v/s USD2.4/mscfe in ). Exhibit 14: Shale gas revenues down YoY impacted by production Revenues (USDm) EBITDA (USDm) Exhibit 15: RIL production down 30.8% YoY and 9.4% QoQ (RIL Production Share bcfe) Shale gas vol, net (bcfe) January

11 Organized Retail: Sales at INR87b; sold 2.8m LYF devices revenues up 47%; presence in 686 cities with 3,553 stores Exhibit 16: Reliance retail has opened 111 stores in, increasing presence increased to 686 cities No. of stores (No.) 1,723 2,006 2,285 2,621 2,747 2,857 3,043 3,245 3,383 3,442 3,553 Addition No. of Cities Avg. stores per city Exhibit 17: Reliance opened 111 new stores in Value and others Digital Brand, Jewellery, Fashion & Lifestyle Total Stores 2,621 2,747 2,857 3,043 2,285 2, , ,196 1,298 1,379 1, ,245 3,383 3,442 3,553 1,862 1,917 1,986 Valuation and view RIL is in the midst of executing its largest ever capex plans in core and non-core businesses. Key things to watchout for RIL: (1) telecom launch (INR1.71t capex till date) and subscriber ramp-up, (2) E&P arbitration case outcome for domestic E&P clarity and (3) Update on core capex plan of ~USD18.5b. For FY17/FY18/FY19, we model GRM at USD10.4/9.0/9.4/bbl. Over the last decade, RIL commissioned multiple large projects including KG-D6, RPL refinery, shale gas JV's and organized retail venture. Barring RPL, other projects got marred by external factors leading to subpar stock performance. RIL s capital allocation in recent years had been skewed towards non-core businesses (telecom) to ring-fence its earnings from cyclical businesses. With telecom launch round the corner, RIL stock is entering into a critical juncture as success of telecom venture will drive the stock performance. If core projects are delayed further, it may result in further cut in earnings estimates. Return ratios for RIL remain under pressure with sub-12% on standalone basis. On FY19E basis, the stock trades at 9.5x adj. SA EPS of INR113 and EV/EBITDA of 6.3x. Our SOTP-based fair value stands at INR1,057/share. Maintain Neutral. 16 January

12 Exhibit 18: RIL: Key assumptions Key Metrics FY14 FY15 FY16 FY17E FY18E FY19E Exchange Rate (INR/USD) Refining Capacity (mmt) Production (mmt) Capacity Utilization (%) 110% 110% 112% 111% 110% 110% GRM (USD/bbl) Singapore GRM Premium/(disc) RIL GRM E&P Gas Production (mmscmd) Oil Production (kbd) Pricing Brent Oil (USD/bbl) Wellhead Gas Price (USD/mmbtu) Exhibit 19: RIL: Segmental EBITDA break-up (INRb) Segmental EBITDA (INRb) FY14 FY15 FY16 FY17E FY18E FY19E Refining Petchem E&P Total Segmental EBITDA share (%) Refining Petrochemicals E&P Total Exhibit 20: RIL: Sum of the parts valuation (on FY19 basis) Sum of the parts (on FY19 basis) Remarks/Methodology Core business Refining 471 6x FY19 EBITDA Petchem 470 6x FY19 EBITDA E&P 68 KG D6 10 DCF PMT 13 DCF NEC-25 4 USD 5/boe CBM 8 USD 5/boe Shale (46) 7x EV/EBITDA FY19 KG basin exploratory upside 78 USD 5/boe Investments RGTIL 7 Book value Reliance Retail 88.7x FY19 sales RJio 19 As per our telecom analyst Total 1,122 Net debt / (cash) 66 Target price 1, January

13 Reliance Industries: Story in charts Exhibit 21: RIL s earnings growth momentum on a recovery track Exhibit 22: Also return ratios are expected to gradually recover 24.9 PAT (INRb) PAT - YoY (%) RoCE (%) RoE (%) (1.2) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Exhibit 23: Refinery throughput to remain at 68mmt in FY18/19; GRM to stabilize Refinery Thr' put (mmt) RIL GRM (USD/bbl) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Exhibit 24: Expect petchem EBITDA contribution to increase going forward, followed by refining Refining Petchem E&P Total FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E 16 January

14 Reliance Industries: Story in charts Exhibit 25: Segmental EBITDA break-up (%) - E&P a dampener, refining and petchem outshine Refining Petrochemicals E&P 100 Exhibit 26: Expect E&P production to decline; though new policy can boost long-term production (mmscmd) 56.2 Gas Production (mmscmd) FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Exhibit 27: RIL refining margins improved in FY16 (USD/bbl) after staying flat in recent years Singapore GRM Premium/(disc) RIL GRM Exhibit 28: We expect petchem EBITDA to improve in FY18/19 Petchem EBITDA (INRb) FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Exhibit 29: Dividend Payout stabilized in recent years (%) Dividend payout (%) 20 Exhibit 30: RIL 1Yr Fwd P/E Chart (last 10 years) PE (x) Peak(x) Avg(x) Min(x) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Dec-06 Mar-08 Jun Sep-10 Dec-11 Mar Jun-14 Sep Dec January

15 Financials and valuations Standalone - Income Statement INR Million) Y/E March FY13 FY14 FY15 FY16 FY17E FY18E FY19E Total Income from Operations 3,602,970 3,901,170 3,290,760 2,331,580 2,376,912 2,756,646 2,846,223 Change (%) Purchases -28,150 9,360 90,770 84,120-5, Manufacturing and Other Expenses 3,323,980 3,584,150 2,883,970 1,853,990 1,960,653 2,288,695 2,365,542 Total Expenditure 3,295,100 3,592,400 2,974,740 1,930,190 1,955,613 2,288,695 2,365,542 % of Sales EBITDA 307, , , , , , ,681 Margin (%) Depreciation 94,650 87,890 84,880 95, , , ,617 EBIT 213, , , , , , ,064 Int. and Finance Charges 30,360 32,060 23,670 24,540 43,280 37,125 30,375 Other Income 79,980 89,360 87,210 75,820 99,224 92,243 99,747 PBT bef. EO Exp. 262, , , , , , ,437 EO Items PBT after EO Exp. 262, , , , , , ,437 Total Tax 52,810 58,340 67,490 82,840 82,454 89,751 94,036 Tax Rate (%) Reported PAT 210, , , , , , ,401 Adjusted PAT 210, , , , , , ,401 Change (%) Margin (%) Standalone - Balance Sheet (INR Million) Y/E March FY13 FY14 FY15 FY16 FY17E FY18E FY19E Equity Share Capital 32,540 32,320 32,360 32,400 32,400 32,400 32,400 Eq. Share Warrants & App. Money Total Reserves 1,767,410 1,938,420 2,129,230 2,369,360 2,619,527 2,891,835 3,177,144 Net Worth 1,800,200 1,970,910 2,161,760 2,401,840 2,651,927 2,924,235 3,209,544 Total Loans 724, , ,170 1,071,300 1,000, , ,000 Deferred Tax Liabilities 121, , , , , , ,590 Capital Employed 2,646,180 2,947,870 3,264,700 3,604,730 3,783,517 3,705,825 4,041,134 Gross Block 2,131,540 2,225,650 2,360,620 2,622,320 2,910,190 3,305,650 3,315,650 Less: Accum. Deprn. 1,034,060 1,131,590 1,214,990 1,308,220 1,410,674 1,525,782 1,648,399 Net Fixed Assets 1,097,480 1,094,060 1,145,630 1,314,100 1,499,516 1,779,868 1,667,251 Capital WIP 191, , ,530 1,068, , , ,540 Total Investments 525, ,620 1,125,730 1,520,590 1,520,590 1,520,590 1,520,590 Curr. Assets, Loans&Adv. 1,371,380 1,269, , , , ,438 1,393,085 Inventory 427, , , , , , ,735 Account Receivables 118, ,640 46,610 34,950 33,666 39,045 40,314 Cash and Bank Balance 495, , ,710 68, , , ,889 Loans and Advances 329, , , , , , ,147 Curr. Liability & Prov. 538, , , ,470 1,148,456 1,326,610 1,370,333 Account Payables 495, , , ,880 1,101,671 1,276,542 1,318,289 Provisions 43,480 41,670 62,580 26,590 46,785 50,068 52,044 Net Current Assets 832, , , , , ,173 22,752 Appl. of Funds 2,646,180 2,947,870 3,264,700 3,604,730 3,783,517 3,705,825 4,041,134 E: MOSL Estimates 16 January

16 Financials and valuations Ratios Y/E March FY13 FY14 FY15 FY16 FY17E FY18E FY19E Basic (INR) EPS Cash EPS BV/Share ,088.8 DPS Payout (%) Valuation (x) P/E Cash P/E P/BV EV/Sales EV/EBITDA Dividend Yield (%) FCF per share Return Ratios (%) RoE RoCE RoIC Working Capital Ratios Fixed Asset Turnover (x) Asset Turnover (x) Inventory (Days) Debtor (Days) Creditor (Days) Leverage Ratio (x) Current Ratio Interest Cover Ratio Net Debt/Equity Standalone - Cash Flow Statement (INR Million) Y/E March FY13 FY14 FY15 FY16 FY17E FY18E FY19E OP/(Loss) before Tax 262, , , , , , ,437 Depreciation 94,650 87,890 84,880 85, , , ,617 Direct Taxes Paid -52,810-58,340-67,490-85,900-82,454-89,751-94,036 (Inc)/Dec in WC 59,460-51, , , , ,466 4,304 CF from Operations 364, , , , , , ,321 Others ,620 4, CF from Operating incl EO 364, , , , , , ,321 (Inc)/Dec in FA -168, , , , , ,540-50,000 Free Cash Flow 196,330-54,150 14, , , , ,321 (Pur)/Sale of Investments 14, , , , CF from Investments -153, , , , , ,540-50,000 Issue of Shares -40,040-16, , Inc/(Dec) in Debt -41, ,580 36,600 32,150 76, ,000 50,000 Dividend Paid -30,750-32,680-35,590-37,000-42,169-45,901-48,092 CF from Fin. Activity -111, , ,030 34, ,901 1,908 Inc/Dec of Cash 99, , ,530-46, ,398 45, ,229 Opening Balance 395, , , ,710 68, , ,660 Closing Balance 495, , ,710 68, , , , January

17 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 1: Sensex rebased Source: MOSL/Bloomberg Exhibit 2: Shareholding pattern (%) Sep-16 Jun-16 Sep-15 Promoter DII FII Others Note: FII Includes depository receipts Source: Capitaline Exhibit 3: Top holders Holder Name % Holding LIC of India 8.8 Reliance Chemicals Limited 1.9 Europacific Growth Fund 1.9 Reliance Polyolefins Limited 1.9 Government of Singapore 1.0 Exhibit 4: Top management Name Designation Mukesh D Ambani Chairman & Managing Director Hital R Meswani Executive Director Nikhil Meswani Executive Director Pawan Kumar Kapil Executive Director PMS Prasad Executive Director K Sethuraman Company Secretary Exhibit 5: Directors Name Nita M Ambani Ashok Misra Dipak C Jain R A Mashelkar Y P Trivedi Source: Capitaline Name Adil Zainulbhai D V Kapur M L Bhakta Raminder Singh Gujral Maheswar S Sahu Source: Capitaline *Independent Exhibit 6: Auditors Name Bandyopadhyaya Bhaumik & Co Chaturvedi & Shah Deloitte Haskins & Sells LLP Dilip M Malkar & Co Diwanji & Associates Type Cost Auditor Statutory Statutory Cost Auditor Cost Auditor Source: Capitaline Exhibit 7: MOSL forecast v/s consensus EPS (INR) MOSL forecast Consensus forecast Variation (%) FY FY Source: Bloomberg 16 January

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This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Varun Kumar Varun.kumar@motilaloswal.com Contact : (+65) Office Address:21 (Suite 31),16 Collyer Quay,Singapore Motilal Oswal Securities Ltd Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai January 2017 Phone: reports@motilaloswal.com 18