RELIANCE INDUSTRIES Going crackers

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1 COMPANY UPDATE RELIANCE INDUSTRIES Going crackers India Equity Research Oil, Gas and Services We had highlighted that Reliance Industries (RIL) USD20bn core capex is nearing fruition, which, unlike the uncertainties associated with Reliance JIO (RJIO), will quickly bolster earnings. The company has now commissioned one of its most profitable core projects, a USD4.5bn offgas cracker (ROGC), which is estimated to generate EBITDA or USD1.2bn (8% of FY19E EBITDA) and healthy project RoCE of 21%. The project is one of the most competitive globally with feedstock advantage and 33% lower capital costs. Similarly, its other oil-leveraged mega project, ethane imports from US, is already generating high returns and petcoke gasification (USD5bn) project should commence operations shortly. Maintain BUY with revised TP of INR1,151 (INR1,104 earlier), amongst the highest on the Street, as we rollover to FY20E. Cracking off-gas: 33% lower capital cost, to earn 21% RoCE ROGC (1.5MMT) is one of the most profitable projects amongst RIL s USD20bn core investments. We estimate project RoCE of 21% (USD1.2bn EBITDA) assuming revised oil price estimate of USD60/bbl (USD56/bbl earlier). Key competitive advantages: 1) advantaged feedstock: ROGC is as competitive as low-cost gas-based Middle-East and North American crackers owing to lower feedstock cost (refinery off-gas, 4.5mmscmd); 2) lower capital cost: 33% lower capital cost, according to our estimates, compared to recent cracker projects in North America (Sasol, CP Chem, Shell, Exxon, Total, PTTGC) given favourable commissioning time, labour cost and project management. Timing s right: Oil rally benefits commissioning of key projects RIL has already commissioned major projects paraxylene (2.2MMTPA), US ethane imports and is set to commission petcoke gasification (USD5bn each) over the next 6 months. Recent projects are sensitive to oil price and as per our sensitivity analysis a 10% rise in oil price will boost RIL s FY20E EPS 3-4%. The recent rally in oil price has improved the economics of these projects. EDELWEISS 4D RATINGS Absolute Rating Rating Relative to Sector Risk Rating Relative to Sector Sector Relative to Market BUY Outperform Medium MARKET DATA (R: RELI.BO, B: RIL IN) Equalweight CMP : INR 915 Target Price : INR 1, week range (INR) : 960 / 506 Share in issue (mn) : 6,503.8 M cap (INR bn/usd mn) : 5,950 / 93,663 Avg. Daily Vol.BSE/NSE( 000) : 5,545.5 SHARE HOLDING PATTERN (%) Current Q1FY18 Q4FY17 Promoters * MF's, FI's & BK s FII's Others * Promoters pledged shares (% of share in issue) : NIL PRICE PERFORMANCE (%) Stock Nifty EW O & G Index 1 month months months Outlook and valuations: Core gains, RJIO rerating; retain BUY With commissioning of mega core projects, we expect RIL s FCF to turnaround, RoE to increase and profit to double in 4 years. Successful execution of RJIO bolsters our confidence in the mega venture. The stock trades at 1.3x FY20E P/BV. We reiterate BUY/SO with revised TP of INR1,151 as we rollover valuation to FY20E. Financials (INR mn) Net revenue 3,053,820 3,706,397 4,301,535 4,658,348 EBITDA 461, , ,529 1,028,017 Adjusted Profit 297, , , ,449 Adjusted diluted EPS (INR) EV/EBITDA (x) ROAE (%) Edelweiss Research is also available on Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset. Jal Irani jal.irani@edelweissfin.com Yusufi Kapadia yusufi.kapadia@edelweissfin.com Vivek Rajamani vivek.rajamani@edelweissfin.com January 3, 2018 Edelweiss Securities Limited

2 Oil, Gas and Services Highly competitive off-gas cracker commissioned in record time RIL has invested USD4.5bn towards setting up its off-gas cracker project at Jamnagar. This has now been commissioned in record time and at ~33% lower capital cost compared to similar projects globally. Refinery off gas (RFG) released (~4mmscmd) from its two refineries at Jamnagar will be used to produce higher value-added polymer derivatives. Ethylene from ROGC is used in downstream plants to produce Mono-Ethylene Glycol (MEG) and Polyethylene (LLDPE and LDPE). Similarly, Propylene from ROGC has enhanced output of the existing Polypropylene (PP) plants at Jamnagar complex to produce high-value copolymers. The in-situ cost of RFG is difficult to estimate as it majorly comprises methane (C1), hydrogen and other impure gases; we believe, it could be around USD9/mmbtu FOB or USD10/mmbtu when it gets transferred to the off-gas cracker. This innovative approach of integration with refineries provides a sustainable cost advantage, making ROGC competitive with respect to the crackers in Middle-East and North America which have feedstock cost advantage. RIL s combined ethylene capacity is now close to 4MMTPA at five of its manufacturing sites. With ROGC and imported ethane, RIL has one of the most competitive and flexible cracker portfolios. We estimate the project to generate incremental EBITDA of USD1.2bn with RoCE of 21%. Table 1: Capital cost - ROGC is 33% more competitive than recent US projects Company Capacity Cost (USD Location Cost / Ton (MTPA) mn) (USD) Sasol 1.5 8,900 Louisiana 5,933 Chevron Phillips 1.5 6,000 Texas 4,000 Shell 1.6 6,000 Pennsylvania 3,750 Exxon / Sabic ,000 Texas 5,556 PTT Global 1.0 6,000 Ohio 6,000 Total / NOVA 1.0 1,700 Texas 1,700 RIL 1.5 4,500 India 3,000 Average (US projects) 4,490 Source: Edelweiss research Economics of off-gas cracker Off gas cracker: Project competitiveness will enhance with rising oil, possibly offset by rising LNG prices. We estimate RoCE of 21% at current prices (Brent: USD65/bbl, LNG: USD10/bbl FOB). 2 Edelweiss Securities Limited

3 Reliance Industries Table 2: Economics of off-gas cracker project Current FY19E Brent price (USD/bbl) LNG FOB (USD/mmbtu) Realisation (USD/mt) Ethylene 1,400 1,320 1,230 1,190 1,150 1,100 1,060 Propylene 1,200 1,120 1, MEG LDPE 1,550 1,470 1,380 1,340 1,300 1,250 1,210 HDPE / LLDPE 1,540 1,460 1,370 1,330 1,280 1,240 1,200 Polypropylene 1,470 1,390 1,300 1,260 1,210 1,170 1,130 USD mn Revenues Ethylene 2,100 1,980 1,845 1,785 1,725 1,650 1,590 Propylene MEG LDPE HDPE / LLDPE Polypropylene Feedstock costs 1, Gross Profits (USD mn) 1,424 1,420 1,405 1,411 1,402 1,396 1,394 Gross profits (USD/mmt) 1,039 1,037 1,026 1,030 1,023 1,019 1,017 Opex ($ per production) EBITDA (USD mn) 1,174 1,170 1,155 1,161 1,152 1,146 1,144 EBITDA (USD/mmt) Depreciation EBIT (USD mn) Interest PBT PAT (USD mn) CROCI (%) ROCE (%) ROE (%) Source: Edelweiss research Oil recovery coincides with commissioning of critical projects Of RIL s grandiose USD50bn capex, effectively doubling gross block, ~45% was incurred towards core business refining and petrochemical. The highly profitable mega projects: 1) US ethane imports (USD1.5bn, Q1FY18); 2) off-gas cracker (USD4.5bn, Q4FY18); and 3) petcoke gasification (Q4FY18, USD5bn) will further enhance GRMs and petrochemical margins. Against existing defensive downstream business portfolio, these key upcoming projects are positively leveraged to oil price, thereby increasing RIL s overall earnings sensitivity to oil price. Competitiveness of these 3 critical core projects along with existing upstream business will be further enhanced due to recovery in oil price. Pertinently, nearly half of RIL s EPS sensitivity is attributed to petcoke gasification earnings. 3 Edelweiss Securities Limited

4 Oil, Gas and Services Furthermore, our sensitivity analysis indicates that even in an unlikely stress case scenario of continued depressed oil price environment (below USD50/bbl), RIL will continue to clock robust earnings growth riding commissioning of its grandiose capex. Table 3: Summary of RIL s key core projects USD17.5bn core investment will deliver strong volumes/earnings growth Project size Capacity post Capex (USDbn) Commissioning (ktpa) expansion (ktpa) Global rank Refining 5.0 Petcoke Gasification 5.0 4Q18 Petrochemicals 12.5 Polymer Projects 5.5 Off-gas cracker 4.5 4Q18 1,500 Polypropylene 0.5 1Q ,825 Top largest globally PVC 0.5 4Q Polyester projects 4.1 PFY 0.3 1Q ,500 PTY 0.1 1Q PTA I 0.8 1Q16 1,150 5,000 Top 5 globally PTA II 0.8 4Q16 1,150 PET 0.5 1Q ,150 Leading producer PX I 0.7 3Q ,500 PX II 1.0 1Q18 1,500 Elastomers projects 1.4 PBR 0.1 2Q SBR 0.4 4Q Butyl Rubber 0.9 1Q Ethane Import 1.5 1Q18 2nd largest on full commissioning Source: Company, Edelweiss research Table 4: RIL s FY20 EPS sensitivity- 10% swing in oil price positively impact EPS by 3-4% FY20 Brent price (USD/bbl) Financials for FY EBITDA (INR mn) 1,128,362 1,063,705 1,045,902 1,042,317 1,028,017 1,016, ,600 Adjusted Profits (INR mn) 627, , , , , , ,561 EPS (INR mn) EPS sensitivity (%) 22% 9% 5% 3% 0% -3% -7% EPS change over FY17 (%) 111% 90% 82% 79% 74% 69% 62% Target price (INR) 1,324 1,233 1,191 1,178 1,151 1,126 1,095 Upside to CMP (%) 45% 35% 30% 29% 26% 23% 20% Source: Edelweiss research Economics of petcoke gasification and off-gas cracker Petcoke gasification: This project is highly sensitive to oil prices RIL s RoCE could touch 35% from 17% if FY19E Brent assumption changes to USD80/bbl from USD65/bbl. 4 Edelweiss Securities Limited

5 Reliance Industries Table 5: Economics of petcoke gasification project Current FY19E Brent price (USD/bbl) LNG Landed LNG cost (USD/mmbtu)* Increase in Net GRMs or EBITDA (USD/bbl) EBITDA increase (USD mn/year) 2,517 2,063 1,609 1,337 1, EBITDA increase (INR bn/year) PAT increase (INR bn) EPS increase (INR) Capex (USD mn) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 CROCI (%) ROCE (%) ROE (%) Source: Edelweiss research * regas = USD0.7/mmbtu; 2.5% import duty; Assumed petcoke prices of USD110/MT Assumed 20% savings on petcoke cost due to hydrogen production 5 Edelweiss Securities Limited

6 Oil, Gas and Services Outlook & valuations: FCF to turn positive as mega capex tapers; BUY Following conclusion of RIL s ongoing mega capex programme of ~USD50bn, we expect free cash flow (FCF) to turn positive. With rollout of RJIO, capex intensity in the telecom venture will also come off sharply. As capex tapers gradually, we believe, cash flows from operations will ramp up with the commissioning of core projects. Chart 1: With mega capex cycle culminating FCF is envisaged to revive 1, (INR bn) 200 (200) (600) (240) (INR bn) (1,000) FY14 FY15 FY16 FY17E FY18E FY19E FY20E (500) Operating cash flow Capex FCFF (RHS) FCFE (RHS) Source: Company, Edelweiss research Commissioning of core projects will improve RIL s returns and result in the stock re-rating. Also, as CWIP declines over the next 2 years with commissioning of the highly profitable upcoming projects, returns are set to revive. Earlier too, during a similar capex period in , the stock had re-rated sharply it peaked at 4.2x P/BV and 26x PER 2007E, in anticipation of strong earnings growth. 6 Edelweiss Securities Limited

7 Reliance Industries Table 6: We raise RIL s SOTP based target price to INR1,151 as we rollover valuation to FY20E Base value (USD bn) Base value Base value (INR bn) (INR/share) % Comments Refining (@ EV/EBITDA = 6.5x) , % Global Refining peers trades at 6.8x. Assumed GRM of USD11.8/bbl, USD13/bbl, USD13.6 in FY18/19/20. Petchem (@ EV/EBITDA = 7x) , % Global petchem peers trades at 7x. Assumed EBITDA of USD135/mt, USD158/mt, USD174 in FY18/19/20. (a) PMT (DCF) % (b) KG-D6 (DCF) % Includes D1/D3, MA, R-Series and Satellite fields, NPV from marketing margins (c) NEC-25 (DCF) % (d) CBM (DCF) % (e) Value of MJ % India Upstream % Shale Gas % Retail (@ EV/Sales = 1.5x) , EV/Sales = 1.5x FY20 Telecom (20% discount to NPV) , % Estimate Telecom NPV of INR3.0trn Value of operating assets 130 8,607 1, % Cons. Cash & Cash Eq % Investments % Includes losses in others; 75% of investment in traded/liquid assets WIP debt + equity (@100% of CWIP) % CWIP invested in project capex Gross Debt , % Net debt , % SOTP ,543 1, % Less: Conglomerate 10% 128 SOTP 1,151 CMP 915 Return on CMP (%) 26% Source: Edelweiss research 7 Edelweiss Securities Limited

8 Oil, Gas and Services Company Description RIL is the largest private player in the refining, petrochemical and E&P sectors in India. While RIL s refining complex in Jamnagar is the largest in the world and among the most complex, it is also among the largest integrated petrochemical producers globally. Apart from E&P in India, RIL has made significant investments in US shale gas. In terms of EBIT, Refining contribute 60% and Petrochemicals 30%. RIL is also expanding its presence in the areas of consumer retailing and telecom. EBIT contribution from retail is 2% while telecom operations has been commercially launched in September 2016, which we believe will have 3 years of start-up losses at EBITDA level. RIL has a weight of 9.1% in BSE Sensex and 7.5% in S&P CNX Nifty. Investment Theme RIL s strength lies in its ability to build businesses of global scale and execute complex, timecritical, and capital-intensive projects which will prove advantageous as it embarks on large investments in all core segments. We expect non-regulated segments (refining, chemicals and shale) to contribute ~90% of incremental EBITDA over the next few years. We are positive on both refining and chemicals. We believe refining margins in Asia will rise due to a paradigm shift in regional refining dynamics from West to East, which will favor a complex refiner like Reliance. Global utilization rates have bottomed out in chemicals. RIL is currently in a capex phase, investing in world-scale projects like petcoke gasification, off-gas crackers and telecoms, which are expected to drive future growth. Key Risks Slow down in global demand or larger than expected capacity additions could impact RIL s refining and chemical margins. Delay in the commissioning of key upcoming core projects: petcoke gasification and off-gas cracker, could significantly impact our earnings model. Delays in government approvals for India E&P or weak domestic gas prices could hamper progress in upstream. Weak US natural gas prices could lower the profitability of shale gas assets, though it could be offset by the liquids-rich acreages which are currently highly profitable. Rupee appreciation may impact negatively as RIL is positively leveraged to the depreciating currency. About two-fifths of RIL s capex is in unrelated diversifications, especially telecoms & related. We believe that the telecom business shall have a long ~5 year gestation, before it becomes profitable. 8 Edelweiss Securities Limited

9 Reliance Industries Financial Statements Key Assumptions Macro GDP(Y-o-Y %) Inflation (Avg) Repo rate (exit rate) USD/INR (Avg) Sector Upstream Brent Crude (USD/bbl) Gas price (USD/mmbtu) Petchem Edel cracking mgn USD/mt 1, PP margins (USD/mt) PXL margins (USD/mt) PTA margins (USD/mt) MEG margins (USD/mt) (19.0) Company Refining Refining thrput (mmt) GRM (USD/bbl) Chemicals Chem prodn (mmt) Chem EBITDA (USD/mt) India E&P Gr. gas prdn-pmt mmscmd Gr.gas prdn KGD6(mmscmd) Gr. gas prdn NEC(mmscmd) Gr. gas prdn CBM(mmscmd) RIL nt gas prdn (mmscmd) KG-D6 gas (USD/mmbtu) Shale Gas RIL % sh gas prdn mmscmd US shale gas(usd/mmbtu) Financial assumptions Avg. Interest rate (%) Capex (INR bn) Debt (INR bn) 1,966 2,919 3,132 3,276 Cash conversion cycle (26) (8) Income statement (INR mn) Net revenue 3,053,820 3,706,397 4,301,535 4,658,348 Materials costs 2,123,000 2,412,512 2,590,771 2,714,938 Gross profit 930,820 1,293,885 1,710,764 1,943,410 Operating expenses 468, , , ,394 EBITDA 461, , ,529 1,028,017 Depreciation 116, , , ,997 EBIT 345, , , ,019 Add: Other income 94, , , , Less: Interest Expense 38,490 87, , ,092 Profit Before Tax 401, , , ,501 Less: Provision for Tax 102,010 90, , ,464 Less: Minority Interest ,141 1,588 Associate profit share (1,080) Reported Profit 297, , , ,449 Adjusted Profit 297, , , ,449 Shares o /s (mn) 5,896 5,896 5,896 5,896 Adjusted Basic EPS Diluted shares o/s (mn) 5,896 5,896 5,896 5,896 Adjusted Diluted EPS Adjusted Cash EPS Dividend per share (DPS) Dividend Payout Ratio(%) Common size metrics Operating expenses Materials costs Staff costs S G & A expenses Depreciation Interest Expense EBITDA margins Net Profit margins Growth ratios (%) Revenues EBITDA PBT Adjusted Profit (0.7) EPS (0.7) Edelweiss Securities Limited

10 Oil, Gas and Services Balance sheet (INR mn) As on 31st March FY17 FY18E FY19E FY20E Share capital 29,590 99,460 99,460 99,460 Reserves & Surplus 2,607,500 3,092,309 3,480,666 3,939,180 Shareholders' funds 2,637,090 3,191,769 3,580,126 4,038,640 Minority Interest 29,170 34,877 36,018 37,606 Short term borrowings 444, , , ,769 Long term borrowings 1,521,480 2,026,293 2,234,002 2,363,030 Total Borrowings 1,965,990 2,919,062 3,131,771 3,275,799 Long Term Liabilities 315, , , ,130 Def. Tax Liability (net) 211, , , ,262 Sources of funds 5,159,360 6,688,522 7,293,897 7,902,437 Gross Block 2,810,530 4,534,401 5,103,913 5,412,605 Net Block 1,688,220 3,253,736 3,582,241 3,633,073 Intangible Assets 297, , , ,177 CWIP (incl. intangible) 3,248,370 2,271,666 2,321,666 2,271,666 Total Fixed Assets 5,233,630 5,819,095 6,204,811 6,218,916 Non current investments 366, , , ,336 Cash and Equivalents 557, , ,224 1,431,549 Inventories 534, , , ,407 Sundry Debtors 81,770 87,817 96, ,173 Loans & Advances 230, , , ,794 Other Current Assets 63,740 27,618 27,711 27,808 Current Assets (ex cash) 910, ,170 1,085,637 1,153,222 Trade payable 765, , , ,252 Other Current Liab 1,142, , ,894 1,043,334 Total Current Liab 1,908,660 1,429,944 1,619,150 1,720,586 Net Curr Assets-ex cash (998,270) (434,774) (533,513) (567,364) Uses of funds 5,159,360 6,688,522 7,293,897 7,902,437 BVPS (INR) Free cash flow (INR mn) Reported Profit 297, , , ,449 Add: Depreciation 116, , , ,997 Interest (Net of Tax) 28,709 68, , ,442 Others (288,009) (81,486) (79,223) (80,926) Less: Changes in WC (341,600) 256,066 (19,830) 17,393 Operating cash flow 496, , , ,569 Less: Capex 781, , , ,142 Free Cash Flow (284,680) (518,684) 97, ,427 Cash flow metrics Operating cash flow 496, , , ,569 Investing cash flow (662,920) (1,033,161) (564,221) (209,568) Financing cash flow 86, ,403 24,699 (64,046) Net cash Flow (80,340) (255,612) 238, ,956 Capex (781,090) (758,830) (680,949) (333,142) Dividend paid (37,617) (41,053) (46,651) (55,981) Profitability and efficiency ratios ROAE (%) ROACE (%) Inventory Days Debtors Days Payable Days Cash Conversion Cycle (26) (8) Current Ratio Gross Debt/EBITDA Gross Debt/Equity Adjusted Debt/Equity Net Debt/Equity Interest Coverage Ratio Operating ratios Total Asset Turnover Fixed Asset Turnover Equity Turnover Valuation parameters Adj. Diluted EPS (INR) Y-o-Y growth (%) (0.7) Adjusted Cash EPS (INR) EV / Sales (x) EV / EBITDA (x) Peer comparison valuation Market cap Diluted P/E (X) EV / EBITDA (X) ROAE (%) Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E Reliance Industries 93, Bharat Petroleum Corporation 16, Hindustan Petroleum Corporation 9, Indian Oil Corporation 29, Median AVERAGE Source: Edelweiss research 10 Edelweiss Securities Limited

11 Additional Data Reliance Industries Directors Data Mukesh D Ambani Chairman and Managing Director P M S Prasad Executive Director Pawan Kumar Kapil Executive Director Hital R Meswani Executive Director Nikhil R Meswani Executive Director Mansingh L Bhakta Independent Director Nita Ambani Non Executive Non Independent Director Raghunath A Mashelkar Independent Director Dharam Vir Kapur Independent Director Dipak C Jain Independent Director Yogendra P Trivedi Independent Director Ashok Misra Independent Director Adil Zainulbhai Independent Director Raminder S. Gujral Independent Director Auditors - Chaturvedi & Shah, Deloitte Haskins & Sells LLP, Rajendra & Co *as per last annual report Holding Top10 Perc. Holding Perc. Holding Devarshi commercials Srichakra commercial Life insurance corp 7.87 Karuna commercials l 7.81 Tattvam enterprises 6.63 Capital group compan 5.19 Reliance industries 3.96 Petroleum trust 3.7 Vanguard group 1.8 Blackrock 1.72 *in last one year Bulk Deals Data Acquired / Seller B/S Qty Traded Price 20 Mar 2017 Rishikesh Enterprises Llp Sell Mar 2017 Adisesh Enterprises Llp Sell Mar 2017 Kankhal Trading Llp Sell Mar 2017 Pavana Enterprises Llp Sell Mar 2017 Srichakra Commercials Llp Buy Mar 2017 Pitambar Enterprises Llp Sell Mar 2017 Tattvam Enterprises Llp Buy Mar 2017 Devarshi Commercials Llp Buy Mar 2017 Tattvam Enterprises Llp Buy Mar 2017 Abhayaprada Enterprises Llp Sell Mar 2017 Adisesh Enterprises Llp Sell Mar 2017 Taran Enterprises Llp Sell Mar 2017 Trilokesh Commercials Llp Sell *in last one year Insider Trades Reporting Data Acquired / Seller B/S Qty Traded 19 Apr 2017 P Raghavendran Sell Mar 2017 KHUSBOO M. MODI TRUST MANOJ H MODI, TRUSTEE Sell Mar 2017 BHAGWATI TRUST KHUSHBOO R. PODDAR SMITA M MODI, TRUSTEE Sell Mar 2017 MANOJ H MODI Sell Mar 2017 SMITA M MODI Sell *in last one year 11 Edelweiss Securities Limited

12 RATING & INTERPRETATION Company Absolute reco Relative reco Relative risk Company Absolute reco Relative reco Relative Risk Bharat Petroleum Corporation BUY SO M Cairn India HOLD SP M GAIL (INDIA) HOLD SP L Gujarat Gas BUY SO M Gujarat State Petronet BUY SO M Hindustan Petroleum Corporation HOLD SP L Indian Oil Corporation BUY SO M Indraprastha Gas BUY SO M Mahanagar Gas Ltd BUY SO H ONGC BUY SO L Petronet LNG HOLD SP L Reliance Industries BUY SO M ABSOLUTE RATING Ratings Expected absolute returns over 12 months Buy More than 15% Hold Between 15% and - 5% Reduce Less than -5% RELATIVE RETURNS RATING Ratings Sector Outperformer (SO) Sector Performer (SP) Criteria Stock return > 1.25 x Sector return Stock return > 0.75 x Sector return Stock return < 1.25 x Sector return Sector Underperformer (SU) Stock return < 0.75 x Sector return Sector return is market cap weighted average return for the coverage universe within the sector RELATIVE RISK RATING Ratings Low (L) Medium (M) High (H) Criteria Bottom 1/3rd percentile in the sector Middle 1/3rd percentile in the sector Top 1/3rd percentile in the sector Risk ratings are based on Edelweiss risk model SECTOR RATING Ratings Overweight (OW) Equalweight (EW) Criteria Sector return > 1.25 x Nifty return Sector return > 0.75 x Nifty return Sector return < 1.25 x Nifty return Underweight (UW) Sector return < 0.75 x Nifty return 12 Edelweiss Securities Limited

13 Reliance Industries Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai Board: (91-22) , Aditya Narain Head of Research Coverage group(s) of stocks by primary analyst(s): Oil, Gas and Services Bharat Petroleum Corporation, Cairn India, GAIL (INDIA), Gujarat Gas, Gujarat State Petronet, Hindustan Petroleum Corporation, Indraprastha Gas, Indian Oil Corporation, Mahanagar Gas Ltd, ONGC, Petronet LNG, Reliance Industries Recent Research Date Company Title Price (INR) Recos 30-Nov-17 ONGC At inflexion point!; Company Update 14-Nov-17 GAIL Strong quarter; limited riskreward; Result Update 181 Buy 456 Hold 14-Nov-17 Bharat Petroleum Corporation Strong marketing shadows poor GRM; Kochi benefits to kick-off soon; Result Update 493 Buy Distribution of Ratings / Market Cap Edelweiss Research Coverage Universe Buy Hold Reduce Total Rating Interpretation Rating Expected to Rating Distribution* * 1stocks under review > 50bn Between 10bn and 50 bn < 10bn Market Cap (INR) Buy Hold Reduce appreciate more than 15% over a 12-month period appreciate up to 15% over a 12-month period depreciate more than 5% over a 12-month period One year price chart 1, Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 (INR) Reliance Industries 13 Edelweiss Securities Limited

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15 Reliance Industries ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or ESL s associates may have financial interest in the subject company. 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