Reliance Industries - Company Update - In fine fettle amidst global uncertainty - BUY

Mr. Avishek Datta - Research Analyst at Prabhudas Lilladher.

Quick Pointers:

- Strong GRMs (USD30/bbl) and higher gas prices (USD 9.9/mmbtu) to drive Q1 earnings, while retail and telecom to deliver steady results.

- RIL's dominant position across businesses makes it a preferred play.

We increase our FY23/24E earnings estimate by 23%/13% as we increase our refining margin assumptions to USD18/13/bbl (+USD6.5/1.5/bbl), while we increase our input price assumptions for petchem. Low product inventory (US diesel inventory lowest since CY08), reduced Chinese exports (May 22 diesel exports down 75% vs CY18-21 avg) and low exports from Russia have pushed Q1 diesel margins to USD42/bbl (Q4: USD18) and gasoline margins to USD 34/bbl (Q4: 16). RIL with access to discounted Russian crude (discount at over USD 30/bbl) and EU exports is best placed to capitalize on tight market conditions, given high refining complexity. We believe higher gas prices along with strong growth in telecom (continued tariff hikes) and retail (store expansion), make RIL a preferred play in challenging times. Reiterate 'BUY' with revised PT of Rs3,277 (Rs3,000).

Shares of Reliance Industries Limited was last trading in BSE at Rs. 2408.95 as compared to the previous close of Rs. 2594.05. The total number of shares traded during the day was 1078836 in over 78025 trades.

The stock hit an intraday high of Rs. 2591.65 and intraday low of 2365.00. The net turnover during the day was Rs. 2624846535.00.

Source : Equity Bulls

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