Reliance Industries Limited - Valuation

Reliance Industries Limited
Valuation
9/9/2011

FinExpertise- Research & Analytics
Analyst: Rajat Dhar
Contact Details:

Mobile + (91)-9999.760.359
E-Mail rajat.dhar1@yahoo.com
Website: www.finexpertise.blogspot.com

September 9, 2011 [RELIANCE INDUSTRIES LIMITED] www.finexpertise.blogspot.com

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

FinExpertise – Research & Analytics. .All Rights Reserved. Page 2


1. Review of Reliance Industries Limited
A. Business Overview



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
Source:, Analyst’s estimates, Company Filings

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%)

Production Production Exploration Textile

Marketing Marketing Production Retail Business

Source: Company Filings
Marketing SEZ Development



RIL – Segment Contribution (in Revenue)
Segment-wise Growth Rate
-------------------LHS------------------ ---------------RHS----------------
80.0% Petrochemicals Refining Oil & Gas Others
6.0%
2007-08 2008-09 2009-10 2010-11
5.0%
60.0%
4.0%
Petrochemicals 4.1% 3.7% 4.7% 14.5%
40.0% 3.0%
2.0% Refining 27.3% 9.0% 48.8% 37.1%
20.0%
1.0%
0.0% 0.0% Oil & Gas 17.2% 45.7% 237.5% 33.4%
2007 2008 2009 2010 2011
Source:, Company Filings

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%
Source: Analyst’s deductions, Company Filings

Segment Contribution (y-o-y) Segment-wise performance over the years shows that the
%age share of Oil & Gas and Refining in the RIL’s revenue
2007 2008 2009 2010 2011 basket has grown consistently over the years, from 1.7% &
Petrochemicals 42.7% 38.6% 36.2% 27.9% 24.5% 53.8% in 2007 to 5.7% & 67.5% respectively in 2011.
Business units categorized under ‘Others’ have also
Refining 53.8% 59.5% 58.7% 64.3% 67.5%
increased from 1.8% in 2007 to 2.3% in 2011.
Oil & Gas 1.7% 1.7% 2.2% 5.6% 5.7%
Others 1.8% 0.1% 2.8% 2.3% 2.3% However, the share of Petroleum in the RIL’s revenue
basket has reduced from 42.7% in 2007 to 24.5% in 2011.
Source: Company Filings



1. Review of Reliance Industries Limited
B. Historical Stock Price Performance
& Projections



Indexed Stock Price Performance
Indexed Comparison Graph

Daily: Feb 9, 2007 - Sept 9, 2011
250.0
RIL BSE
200.0

150.0

100.0

50.0

0.0

Source : BSE

Source: Analyst’s estimate, Company Filings
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



2. Valuation - Reliance Industries Limited
A. Current Valuation



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

Source: BSE, Bloomberg, Company Filings, Analyst’s Deductions

Enterprise Value Multiples P/E Multiple
%(52-Wk M.Cap Enterprise Sales EBITDA EBIT PE
CMP High) 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
Source: Analyst’s estimates

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



2. Valuation - Reliance Industries Limited
C. Historical & Projected Financial
Review



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



3. Profile - Reliance Industries Limited
A. Shareholding Pattern



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
Source: Annual Report 2010-11

Percentage Break-Up (Over All) Percentage Break-Up (Public)

3.7% 33.6%
20.4%
19.1%

50.0%
30.9%
42.3%

Promoter & Promoter Group Public Institution FII DII
Non Institution Body Corporate
Source: Company Filings Source: Company Filings



4. Profile - Reliance Industries Limited
B. Management Profile



Board Composition

Non-Executive
Promoter Executive Independent
Non-Independent
Director Directors Directors
Directors
Mr. Mansingh L. Bhakta
Mr. Nikhil R. Meswani

Mr. Ramniklal H. Ambani Mr. Yogendra P. Trivedi

Mr. Hital R. Meswani Dr. Dharam Vir Kapur

Mr. Mukesh D Ambani,
Mr. Mahesh P. Modi
CMD

Mr. P M S Prasad Prof. Ashok Mishra

Mr. Hardev Singh Kohli Prof. Deepak C. Jain
Mr. Pawan Kumar Kapil Dr. Raghunath A.
Mashelkar

Source: Annual Report 2010-11



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


Reliance Industries Limited - Valuation

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