PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

BUY CMP 867.50 Target Price 920.00 RELIANCE INDUSTRIES LTD. Result Update: Q3 FY14 22 nd Jan 2014 ISIN: INE002A01018 Index Details Stock Data Sector Oil & Gas BSE Code 500325 Face Value 10.00 52wk. High / Low (Rs.) 954.80/765.00 Volume (2wk. Avg.) 271000 Market Cap (Rs. in mn.) 2802892.50 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY13A FY14E FY15E Net Sales 3602970.00 3953393.70 4309199.13 EBITDA 387850.00 399686.30 446141.45 Net Profit 210030.00 222109.13 233214.59 EPS 65.04 68.74 72.18 P/E 13.34 12.62 12.02 Shareholding Pattern (%) Highlights The company s net sales registered 10.26% increase and stood at Rs. 1035210 mn in December quarter of FY14 against Rs. 938860 mn in the corresponding quarter of the previous year. Net profit rose by mere 0.16% in Q3 FY14 and stood at Rs. 55110 mn compared to Rs. 55020 mn in the same period previous year. EBDITA declined by 1.84% and stood at Rs. 99270 mn in Q3 FY14. Profit before tax grew by 2.13% in Q3 FY14. PBT stood at Rs. 69920 mn in the third quarter of FY14 against Rs. 68500 mn in the same period previous year. Gross Refining Margin stood at $ 7.6 /bbl for the quarter. Exports increased by 11.3% at Rs. 744950 mn ($ 12.1 billion) Other Income rose by 32.47% from Rs. 17400 mn to Rs. 23050 mn in Q3 FY14. Refining revenue rose by 10% at Rs. 954320 mn whereas Oil and gas revenues fell by 10% at Rs. 17330 mn in the current December quarter compared to the corresponding quarter of the previous year. 1 Year Comparative Graph RIL retained its domestic credit ratings of AAA from CRISIL and FITCH and an investment grade rating for its international debt from Moody s as Baa2. S&P has raised the long term corporate credit rating to BBB+ from BBB. RELIANCE INDUSTRIES LTD S&P BSE SENSEX RIL successfully commissioned state-of-the-art Polyester Filament Yarn (PFY) plant at Silvassa. The total polyester capacity of Reliance increases from 2.4 MMTPA to 2.8 MMTPA. This plant will be the first Zero-waste plant globally on account of total waste recycling. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 5% over 2012 to 2015E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Reliance Industries Ltd 867.50 2802892.50 65.04 13.34 1.57 90.00 Indian Oil Corporation Ltd 223.80 540705 67.69 3.29 0.88 50.00 HPCL Ltd 233.60 78646.20 197.41 1.18 0.57 85.00 ONGC Ltd 287.00 2458847.90 22.24 12.92 1.98 190.00

ANALYSIS & RECOMMENDATION BUY In midst of low global demand, Reliance Industries Ltd beat street expectations with revenues rising by 10.26% at Rs. 1035210 mn against Rs. 938860 mn in corresponding quarter of the previous year. Though net profit was flat QoQ, it rose by 0.16% YOY at Rs. 55110 mn. Profit before Tax grew at a higher rate of 2% YOY from Rs. 68500 mn to Rs. 69920 mn in Q3 FY14. EBDITA declined by 1.84% from Rs. 101130 mn to Rs. 99270 mn in current December quarter as expenses rose by 11% YOY. Gross Refining Margin stood at $ 7.6 /bbl against $9.6/bbl in Q3 FY13. Other Income jumped by 32% at Rs. 23050 mn from Rs. 17400 mn in corresponding quarter of the previous year. With respect to its mammoth scale of operations, Reliance has weathered the global downturn including domestic hurdles relating to its oil and gas segment. Oil and Gas revenues reported fall of 10%YOY but jumped by 18% QOQ at Rs. 17330 mn in Q3 FY14, indicating revival in the coming quarters. Gas price hike from 1 st April 2014 will help Oil and Gas segment to contribute more to the bottom-line of the company. Core businesses of RIL, refining and petrochemicals grew in double digits YOY. Refining revenues increased by 10% YOY from Rs. 866410 mn to Rs. 954320 mn whereas revenues from petrochemicals rose by 14.63% at Rs. 252800 mn in current December quarter. Outstanding debt as on 31 st December 2013 was Rs.813300 compared to Rs. 724270 mn as on 31 st March 2013. RIL has cash and cash equivalents of Rs. 88,7050 mn in bank deposits, mutual funds, CDs and Government securities / bonds. Thus RIL remains debt free on net basis as on 31 st December 2013. Though Reliance faces various challenges with respect to global slowdown, it is able to protect its margins due to huge economies of scale resulting from its fully integrated energy and materials value chain. With legal issues concerning Oil & Gas exploration behind it, Reliance Industries is poised for double digit growth in the coming quarters. Thus we recommend BUY for the scrip at a target price of Rs. 920.00 for medium and long term. COMPANY PROFILE Reliance Industries, the largest private sector company, is the first Indian company to feature in the Fortune Global 500 list. Reliance Industries is in the business of oil and gas exploration, refining and petrochemicals. The crude oil and gas produced is the raw material for refining and petrochemicals segment. Reliance is also a major importer of oil for its refining business. The major products under refining are LPG gas (Reliance gas), naphtha, gasoline, aviation turbine fuel, kerosene oil, high speed diesel etc. Petrochemical segment produces polyester, fibre intermediates, plastics and chemicals. Reliance Industries went public in 1977. Rampant growth of company is credited to its backward vertical integration in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production. Though it started with textiles, Reliance has transformed itself into a fully integrated energy and materials value chain. At present, Reliance is a global leader in production of polyester yarn and fiber and it is also one of the major producers of petrochemical products. Reliance Industries Limited operates worldclass manufacturing facilities across the country at Allahabad, Barabanki, Dahej, Hazira, Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara. The equity shares of the Reliance are among the

most liquid and actively traded shares on the Indian Stock Exchanges. RIL shares consistently ranks among the top few frequently traded shares, both in terms of the number of shares traded, as well as value. Reliance Industries has a weightage of 8.6% in BSE Sensex and 7% in Nifty. RIL GDRs are listed at Luxembourg Stock Exchange. QUARTERLY HIGHLIGHTS (STANDALONE) Q3 FY14 Net sales of the company rose by 10.26% from Rs. 938860 mn to Rs. 1035210 mn in the December quarter. Net profit grew by a meager 0.16% in Q3 FY14 compared to the corresponding quarter of the previous year. Thus the net profit margin fell by 54 basis points in the Q3 FY14. EBDITA declined by 1.84% at Rs. 99270 mn. EBDITA margin fell by 117 basis points. Other income rose by 32.47% in the December quarter over corresponding quarter of the previous year. Months DEC- 13 DEC-12 Change Net Sales 1035210.00 938860.00 10.26% Net Profit 55110.00 55020.00 0.16% Net Profit Margin 5.32% 5.86% (54BP) EBDITA 99270.00 101130.00-1.84% EBDITA Margin 9.60% 10.77% (117 BP) Other Income 23050.00 17400.00 32.47% Break up of Expenditure Rs. In Mn Q3 FY14 Q3FY13 CHNG % Cost of materials 861240 781700 10% Other Expenses 64780 56470 15% Depreciation 21430 24570-13% Emply benefits exp 7150 8630-17% Stock in trade 30 630-95% Purchase of stock in trade fell by 95% from Rs. 630 mn to Rs. 30 mn in the December quarter. Cost of materials and other expenses rose by 10% and 15% respectively. Cost of materials and other expenses stood at Rs.861240 mn and Rs. 64780 mn respectively. Depreciation expenses fell by 13% whereas employee benefits expenses declined by 17% in the December quarter.

Segment Revenue (Q3 FY14) Rs. Mn Q3 FY14 Q3 FY 13 Change % Refining 954320.00 866410.00 10.15% Petrochemicals 252800.00 220530.00 14.63% Oil and Gas 17330.00 19210.00-9.79% Others 2090.00 1760.00 18.75% REFINING During Q3 FY14, RIL Jamnagar refineries processed 17.0 MMT of crude, an operating rate of 110%, sequentially lower due to maintenance turnaround. With turnarounds, post the driving season, the third quarter utilizations in North America, Europe and Asia were 83.5%, 74.3% and 85.8% respectively. During the quarter, revenue from Refining & Marketing segment increased by 10.1% to Rs.954320 mn ($ 15.4 billion) from Rs. 866410 mn in 3Q FY13. Growth in revenue was accounted by 1% higher volume and 9.1% increase in prices. RIL s refining business maintained stable earnings on Q-o-Q basis despite lower volumes and decline in regional benchmark complex margins. RIL s margins were positively impacted by widening crude differentials, strength in middledistillates and naphtha product cracks, which was offset by weak gasoline cracks. PETROCHEMICALS The petrochemicals segment includes production and marketing operations of petrochemical products namely high density Polyethylene, low density Polyethylene, lines low density Polyethylene, Polypropylene, Polyester Yarn, Polyester fibres, Caustic soda, Aromatics etc. Petrochemicals business revenues rose by 14.63% compared to the corresponding quarter of the previous year. OIL & GAS Revenues from oil and gas exploration fell by 10% in the December quarter compared to the corresponding quarter in the previous year. Oil and exploration business consists of domestic and international operations. Domestic operations include KG-D6, Panna Mukta, Tapti and CBM blocks. Fall in production in domestic operations has been attributed to geological complexity and natural decline in fields. International operations include 2 blocks each in Peru and Yemen. The shale gas business comprises of three upstream joint ventures with Chevron, Pioneer Natural Resources, Carrizo Oil & Gas and a midstream joint venture with Pioneer. Reliance s shale gas business witnessed strong sequential growth during the quarter. Reliance s share of gross

production stood at 43 Bcfe in 3Q FY14, which reflected a growth of 33% Y-o-Y. On a sequential quarter basis, volumes grew 18%. Aggregate revenues for 3Q FY14 at $ 221.3 million reflect a growth of 29% Y-o-Y. Average unit realization was at $6.03/Mcfe in 3Q FY14 compared to $6.19/Mcfe realised in 2Q FY14 which reflects impact of weaker WTI prices and higher differentials. OTHERS The smaller business segments are not separately reported and thus grouped under this segment. Others segment increased by 18.75% in the December quarter compared to the corresponding quarter in the previous year. Latest Updates KG-D6 field produced 1.45 million barrels of crude oil, 0.2 million barrels of condensate and 135 BCF of natural gas in 9M FY14, a reduction of 38%, 44% and 51% respectively on a Y-o-Y basis. Fall in production is mainly attributed to geological complexity and natural decline in the fields. Panna-Mukta fields produced 5.7 million barrels of crude oil and 50.9 BCF of natural gas in 9M FY14 reduction of 11% and 7% respectively on Y-o-Y basis. The decrease in production was due to a shut-down of Panna-Mukta field for three days for SBM maintenance and re-certification work, coupled with natural decline. The decline in production was partly compensated by incremental production from Panna L area and Infill wells. Tapti produced 0.2 million barrels of condensate and 21.4 BCF of natural gas in 9M FY14 a decline of 52% and 41% respectively on Y-o-Y basis. The decrease was due to a natural decline and under performance of new ERD wells drilled in last year. RIL successfully commissioned state-of-the-art Polyester Filament Yarn (PFY) plant at Silvassa. This is the first plant to be commissioned in petrochemical expansions announced earlier. The total polyester capacity of Reliance increases from 2.4 MMTPA to 2.8 MMTPA. This plant will be the first Zero-waste plant globally from day one on account of total waste recycling. The plant is also equipped with zero liquid discharge through evaporation of treated effluents. 9 Months Highlights Rs. Mn As on 31-12-2013 Net Profit 163530 Turnover 3034950 Profit Before Tax 205250 Exports 2089500 Cash Profit 227530 PBDIT 294460 Gross Refining Margin $7.8/bbl

Challenges for Reliance Industries Ltd. The Czar of Oil and Gas Sector, Reliance Industries has at last solved its ongoing tussle with the Central Government over the fall in output from KG- D6. RIL has been arguing that the fall in output has been due to geological complexity and natural decline in fields, whereas the regulatory authorities, Ministry of Oil and Natural Gas and Directorate General of Hydrocarbons contend that the company has been suppressing gas output due to low domestic prices. The Oil Ministry on November 26 th has reiterated that gas price will be double to $ 8.4 btm (British Thermal Units) based on Rangarajan formula. For Reliance Industries, the revised gas price from 1 st April 2014 will revive its oil and gas segment which has been witnessing flagging revenues over the last two years. In addition to that RIL has also offered financial guarantees to settle any claims against the shortfall in gas output from its flagship Krishna-Godavari basin s D6 block, off India s east coast as proposed by the government. Low demand in the emerging markets and EU, the major importers from RIL, has also impacted the profit margins of the company. Though Reliance is net debt free due to high cash reserves, high interest cost on foreign loans impact profit margins. But these are small hiccups for RIL as revival of global demand and hike in domestic gas price will put it back on path of growth and profitability.

FINANCIAL STATEMENTS & ESTIMATIONS (STANDALONE) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as on 31 st March, 2012-2015E Shareholder's Funds Reliance Industries Ltd. FY-12A FY-13A FY-14E FY-15E SOURCES OF FUNDS Share Capital 32710.00 32290.00 32310.00 32310.00 Share application money pending allotment 0.00 250.00 0.00 0.00 Reserves and Surplus 1628250.00 1767660.00 1979219.13 2212433.72 Total Net worth (a) 1660960.00 1800200.00 2011529.13 2244743.72 Non Current Liabilities Long term borrowing 480340.00 430120.00 666686.00 800023.20 Deferred Tax Liabilities 121220.00 121930.00 130465.10 135683.70 Total Non Current liabilities (b) 601560.00 552050.00 797151.10 935706.90 Current Liabilities Short term borrowings 105930.00 115110.00 184176.00 230220.00 Trade payables 403240.00 457870.00 627281.90 752738.28 Other Current liabilities 137130.00 216400.00 242368.00 285994.24 Short term Provisions 42580.00 43480.00 14348.40 15065.82 Total current liabilities (c) 688880.00 832860.00 1068174.30 1284018.34 Total Liabilities (a + b + c) 2951400.00 3185110.00 3876854.53 4464468.96 Non-Current Assets Fixed Assets APPLICATION OF FUNDS 1. Tangible assets 880010.00 829620.00 962359.20 1039347.94 2. Intangible assets 257220.00 267860.00 294646.00 309378.30 3. Capital Work in Progress 36950.00 135250.00 169062.50 202875.00 4. Intangible assets under development 40590.00 55910.00 75478.50 94348.13 Total Fixed Assets 1214770.00 1288640.00 1501546.20 1645949.36 Non-current investments 269790.00 241430.00 333173.40 406471.55 Long Term loans and advances 143400.00 215280.00 301392.00 361670.40 Total Fixed Assets (d) 413190.00 456710.00 634565.40 768141.95 Current Assets Current Investment 270290.00 283660.00 368758.00 459612.15 Inventories 359550.00 427290.00 512748.00 589660.20 Trade receivables 184240.00 118800.00 122364.00 132153.12 Cash and Bank Balances 395980.00 495470.00 565302.93 652495.58 Short-terms loans & advances 110890.00 109740.00 164610.00 207408.60 Other current assets 2490.00 4800.00 6960.00 9048.00 Total Current Assets (e) 1323440.00 1439760.00 1740742.93 2050377.65 Total Assets (d+e) 2951400.00 3185110.00 3876854.53 4464468.96

Annual Profit & Loss Statement for the period of 2012 to 2015E Value(Rs. mn) FY12A FY13A FY14E FY15E Description 12m 12m 12m 12m Net Sales 3299040.00 3602970.00 3953393.70 4309199.13 Other Income 61920.00 79980.00 93894.00 101405.52 Total Income 3360960.00 3682950.00 4047287.70 4410604.65 Expenditure -2962850.00-3295100.00-3647601.40-3964463.20 Operating Profit 398110.00 387850.00 399686.30 446141.45 Interest -26670.00-30360.00-32386.00-35300.74 Gross profit 371440.00 357490.00 367300.30 410840.71 Depreciation -113940.00-94650.00-87427.20-83055.84 Profit Before Tax 257500.00 262840.00 279873.10 327784.87 Tax -57100.00-52810.00-57763.97-68179.25 Profit After Tax 200400.00 210030.00 222109.13 233214.59 Equity capital 32710.00 32290.00 32310.00 32310.00 Reserves 1596980.00 1757110.00 1979219.13 2212433.72 Face value 10.00 10.00 10.00 10.00 EPS 61.27 65.04 68.74 72.18 Quarterly Profit & Loss Statement for the period of 30 th June 2013 to 31 st March, 2014E Value(Rs.in.mn) 30-Jun-13 30-Sep-13 31-Dec-13 31-March-14E Description 3m 3m 3m 3m Net sales 876450.00 1037580.00 1035210.00 1004153.70 Other income 25350.00 20600.00 23050.00 24894.00 Total Income 901800.00 1058180.00 1058260.00 1029047.70 Expenditure -805700.00-959090.00-958990.00-923821.40 Operating profit 96100.00 99090.00 99270.00 105226.30 Interest -8100.00-8050.00-7920.00-8316.00 Gross profit 88000.00 91040.00 91350.00 96910.30 Depreciation -21380.00-22330.00-21430.00-22287.20 Profit Before Tax 66620.00 68710.00 69920.00 74623.10 Tax -13100.00-13810.00-14810.00-16043.97 Profit After Tax 53520.00 54900.00 55110.00 58579.13 Equity capital 32290.00 32310.00 32310.00 32310.00 Face value 10.00 10.00 10.00 10.00 EPS 16.57 16.99 17.06 18.13

Ratio Analysis Particulars FY12A FY13A FY14E FY15E EPS (Rs.) 61.27 65.04 68.74 72.18 EBITDA Margin (%) 12.07% 10.76% 10.11% 10.35% PBT Margin (%) 7.81% 7.30% 7.08% 7.61% PAT Margin (%) 6.07% 5.83% 5.62% 5.41% P/E Ratio (x) 14.16 13.34 12.62 12.02 ROE (%) 12.30% 11.74% 11.04% 10.39% ROCE (%) 23.11% 20.67% 17.02% 16.16% Debt Equity Ratio 0.36 0.30 0.42 0.46 EV/EBITDA (x) 7.61 7.35 7.73 7.13 Book Value (Rs.) 498.22 554.17 622.57 694.75 Charts P/BV 1.74 1.57 1.39 1.25

INDUSTRY OVERVIEW Oil and Gas sector in India is dominated by public sector companies. The major players are ONGC, Oil India, Reliance Industries, Crain Energy, GAIL, Bharat Petroleum, Indian Oil, Bharat Petroleum and Hindustan Petroleum. Reliance Industries and Crain Energy are the two major private players in oil and gas sector. The oil and gas sector consists of three segments upstream, midstream and downstream. The upstream segment primarily comprises of companies that are engaged in exploration and production activities, while the midstream segment comprises of players in storage and transportation, and the downstream segment comprises of players that are engaged in refining, processing and marketing of petroleum products. The oil and gas sector is regulated at two levels, policy level and regulatory level. At the policy level, the oil and gas sector is regulated by the finance ministry and planning commission. At the regulatory level, the sector is administered by the Ministry of Petroleum and Natural Gas, Directorate General for Hydrocarbons and Petroleum and Natural Gas Regulatory Board. India is the sixth largest consumer of oil in the world and the ninth largest crude oil importer. India s oil and gas sector contributes over 15% to the Gross Domestic Product (GDP). Indian imports 75% of its crude oil requirement. Thus change in international crude prices has a significant impact on the economy. Rise in crude prices fuel inflation as the prices of the essential commodities increase simultaneously. Thus it is extremely essential for India to become self sufficient in oil and gas production. Over the last few years, Indian Government has also played a pivotal role in strengthening the core industrial sector. For instance, the introduction of the New Exploration Licensing Policy (NELP) was aimed at intensifying activities in O&G exploration and also allowing 100 per cent foreign direct investment (FDI) in the sector. India s O&G sector is a promising one as there is a huge untapped potential basin while many large blocks offshore are unexplored. India s total hydrocarbon reserves are projected to be around 2 billion metric tonne of Oil Equivalent (bmtoe). Also, the reserves-to-production ratio for the country works out to 25 years with the current oil production level of around 815,000 barrels per day (bpd) and estimated reserves of 1.2 billion metric tonne (bmt). Analysts foresee a bright future for the gas sector as well wherein reserves-to-production ratio is over 30 years (the current production level being around 40 billion cubic metres [bcm] per annum on an estimated reserves base of around 1,500 bcm). The government has also decided to hike gas price on the basis of Rangrajan formula from 1 st April 2014 to revive flagging revenues of Oil and Gas companies. Thus, there is huge growth potential in the oil and gas sector which can be taped and utilized by both the domestic and foreign players for making India self sufficient in crude oil and gas consumption.

OUTLOOK AND CONCLUSION At the current market price of Rs. 867.50, the stock P/E ratio is at 12.62 x FY14E and 12.02 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.68.74 and Rs.72.18 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 5% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 7.73 x for FY14E and 7.13 x for FY15E. Price to Book Value of the stock is expected to be at 1.39 x and 1.25 x respectively for FY14E and FY15E. We recommend BUY in this particular scrip with a target price of Rs.920.00 for Medium to Long term investment. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods Ashish.Kushwaha IT, Consumer Durable & Banking Anil Kumar Diversified Suhani Adilabadkar Diversified M. Vinayak Rao Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO s, QIP s, F.P.O s,takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071 Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089 E-mail: info@firstcallindiaequity.com www.firstcallindiaequity.com