Reliance Industries
BSE SENSEX
40,850
S&P CNX
12,043
5 December 2019
Update | Sector: Oil & Gas
CMP: INR1,551
The Jio boost!
TP: INR1,836 (+18%)
Buy
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
RIL IN
6,339
9841.9 / 137.5
1614 / 1055
5/15/22
12316
51.1
Further to its price-hike announcement last week, RJio – along with Bharti and VIL
– has rolled out new tariff plans with effective hike of ~27%, which should result in
58% increase over annualized 2QFY20 EBITDA.
While the absolute discount between RJio and Bharti/VIL’s price plans are
constant at INR40-50 for most of the popular quarterly bundled plans, the
discount of RJio’s plan over Bharti/VIL’s plan has reduced to 8% from 11- 13% in
previous months.
We raise the equity valuation of RJio from INR280/share to INR500/share as a
result of the tariff hike. We raise the target price of RIL from INR1,630/share to
INR1,836/share.
Financials Snapshot (INR b)
Y/E March
FY19 FY20E FY21E
Net Sales
5,671 6,246 7,140
EBITDA
839
967 1,293
Net Profit
398
489
698
EPS (INR)
67.2
82.6 117.7
EPS Gr. (%)
10.4
22.9
42.5
BV/Sh. (INR)
653
726
830
RoE (%)
11.7
12.0
15.1
RoCE (%)
9.1
9.3
11.6
Payout (%)
11.6
11.6
11.6
Valuations
P/E (x)
23.1
18.8
13.2
P/BV (x)
2.4
2.1
1.9
EV/EBITDA (x)
14.1
12.1
8.6
EV/Sales (x)
2.1
1.9
1.5
Shareholding pattern (%)
As On
Sep-19 Jun-19 Sep-18
Promoter
48.9
46.2
46.2
DII
14.2
11.6
11.6
FII
25.6
26.2
26.2
Others
11.4
16.0
16.0
FII Includes depository receipts
Stock Performance (1-year)
Reliance Inds.
Sensex - Rebased
1,800
1,600
1,400
1,200
1,000
Effective price hike of ~27%; 58% rise over 2QFY20 annualized EBITDA
Following its announcement to raise tariffs, RJio has revealed new effective
price hikes beginning 6
th
Dec’19.
While Minimum Recharge Price plans were hiked by 32% (now beginning at
INR129), the popular monthly plans witnessed a price hike of ~25-30%.
High ARPU prepaid plans have seen ~27% price hike, which would result in
ARPU increasing by INR38 from INR142 to INR180.
While no rates have been disclosed for low ARPU Jio feature phone
subscribers, we assume ~30% price hikes for these subscribers too. Low
ARPU Jio phone subscribers would probably see a hike of INR25 in ARPUs
from INR84 to INR109.
The price differential between RJio and Bharti/VIL’s price plans is constant at
~INR40-50 for most of the popular quarterly bundled plans; however, we see
the discount of RJio’s plan over Bharti/VIL reducing to ~8% from ~11-13%
witnessed in the previous months.
The hike in ARPUs should result in ~INR134b/INR119b incremental
revenue/EBITDA, which is ~25%/58% rise over the previous revenue/EBITDA
(2QFY20 annualized) with 89% incremental EBITDA. Subsequently, we have
revised our revenue/EBITDA estimates upwards by 6.7%/13.8% to
INR553b/INR255b for FY20E and by 24%/44% to INR829b/INR463b for
FY21E.
This should result in incremental EBITDA of INR20/share for RJio with an
implied EV/EBITDA multiple of 11x, taking the target price to INR500 (earlier
INR280).
RJio’s net debt of INR2,042b does not take into account the recent capital
reclassification, which would shift INR1,080b debt to RIL, but may not alter
the overall net debt and TP of the company. However, RJio’s net debt
includes fiber debt of INR460b, which is part of the InvIT but is yet not sold
to an external investor.
Discount over Bharti/VIL reduces; Revenue/EBITDA to rise by ~27%/58%
Swarnendu Bhushan- Research Analyst
(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
Aliasgar Shakir – Research analyst
(Aliasgar.Shakir@motilaloswal.com); +91 22 6129 1565
Sarfraz Bhimani - Research Analyst
(Sarfraz.Bhimani@MotilalOswal.com); +91 22 6129 1566
2 April 2019
Investors are advised to refer through important disclosures made at the last page of the Research Report.
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Reliance Industries
Further, RJio’s free cash flow (FCF) is expected to rise incrementally to INR117b,
which could in turn see its FCF rise to INR143b. This is on the back of INR100b
interest cost, which should be contained due to the recent capital
reorganization announcements and reducing capex intensity in the market as
indicated by RJio and other telcos.
The incremental cash flow could be used to reduce FY21E net debt to EBITDA
from the current 3x.
Based on the ARPU increase, we have raised our TP to INR500 with implied
EV/EBITDA of 11x.
Valuation & recommendation
Refining margins have been trending low due to excess global glut amidst tepid
demand (report
link),
and therefore, the tariff hike has come at the right
moment for the company.
RIL is trading at 8.6x FY21 EV/EBITDA and 13.2x FY21 P/E. We value the core
segments at 8.5x FY21 and add INR413/share for retail. Incorporating the rise in
equity valuation of Jio from INR280/share to INR500/share, we raise the target
price of RIL from INR1,630/share to INR1,836/share (adjusting for other
changes). Reiterate
Buy
on the stock.
Exhibit 1: RIL: Sum of the parts valuation (on FY21E basis)
Sum of the parts (on FY21 basis)
Core business
Refining
Petchem
E&P
Investments
Reliance Retail
RJio
Total
Net debt / (cash)
Target price
405
616
36
413
500
1,970
134
1,836
Remarks/Methodology
8.5x FY21 EBITDA
8.5x FY21 EBITDA
DCF
Standalone
Exhibit 2: RJio change in estimates
FY20E
Revenue (INRb)
Old
Actual/New
Change (%)
EBITDA (INRb)
Old
Actual/New
Change (%)
Net Profit (INRb)
Old
Actual/New
Change (bp)
ARPU (INR)
Old
Actual/New
Change (%)
518
553
6.7
224
255
13.8
43.2
46.1
288bps
122
130
6.7
FY21E
669
829
23.9
322
463
43.9
48.1
55.9
777bps
127
157
23.9
Source: MOFSL
5 December 2019
2
 Motilal Oswal Financial Services
Reliance Industries
Exhibit 3: RJio FCF increase post-tariff hike
Amount (INR b)
EBITDA
Interest Cost
Capex
Previous FCF
Increase in EBITDA
New FCF
FCF Yield
FY21E
322
100
198
24
141
166
9%
Source: MOFSL, Company
Exhibit 4: RJio price plan comparison with Bharti and VIL
Plans
Company
Price Plans (INR)
Validity
GST
Net ARPU
GB (daily)
GBs (Monthly)
Price/GB
Premium to RJIo
2GB Monthly Budget pack
RJio
Bharti
Vodafone
129
148
149
28
28
28
18%
18%
18%
117
134
135
0
0
0
2
2
2
64.5
74.0
74.5
15%
16%
1.5GB/day Monthly pack
RJio
Bharti
Vodafone
199
248
249
28
28
28
18%
18%
18%
181
225
226
2
2
2
42
42
42
4.7
5.9
5.9
25%
25%
1.5GB/day Quarterly pack
RJio
Bharti
Vodafone
555
598
599
84
84
84
18%
18%
18%
168
181
181
2
2
2
126
126
126
4.4
4.7
4.8
8%
8%
Source: MOFSL, Company
Exhibit 5: RJio price plan comparison with old plans
Plans
Company
Price Plans (INR)
Validity
days/Month
Effective monthly plan
GST
Net ARPU
GB (daily)
GBs (Monthly)
Price/GB
Effective price hike
2GB Monthly Budget pack 1.5GB/day Monthly pack 1.5GB/day Quarterly pack
RJio - New
RJio - Old
RJio - New
RJio - Old
RJio - New
RJio - Old
129
98
199
198
555
399
28
28
28
28
84
84
30
30
30
30
30
30
138
105
213
212
198
143
18%
18%
18%
18%
18%
18%
117
89
181
180
168
121
0.1
0.1
2
2
2
2
2
2
42
56
126
126
64.5
49.0
4.7
3.5
4.4
3.2
32%
1%
39%
2GB/day Quarterly pack
RJio - New
RJio - Old
559
448
84
84
30
30
200
160
18%
18%
169
136
2
2
168
168
3.3
2.7
25%
Source: MOFSL, Company
Exhibit 6: RJio new price plans
Jio Price Plans (INR)
Validity (days)
days/Month
Effective monthly plan
GST
Net ARPU
Prime
Total
GB (daily)
GBs
Price/GB
129
28
30
138
18%
117
7
124
0.07
2
64.5
199
28
30
213
18%
181
7
187
1.50
42
4.7
249
28
30
267
18%
226
7
233
2.00
56
4.4
329
84
30
118
18%
100
7
106
0.07
6
54.8
349
28
30
374
18%
317
7
324
3.00
84
4.2
399
56
30
214
18%
181
7
188
1.50
84
4.8
444
56
30
238
18%
202
7
208
2.00
112
4.0
555
84
30
198
18%
168
7
175
1.50
126
4.4
559
84
30
200
18%
169
7
176
2.00
168
3.3
1,299
365
30
107
18%
90
7
97
0.07
24
54.1
2,199
365
30
181
18%
153
7
160
1.50
547.5
4.0
Source: Company
5 December 2019
3
 Motilal Oswal Financial Services
Reliance Industries
Reliance Industries – Standalone Financials and Valuations
Standalone - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
Standalone - Balance Sheet
Y/E March
Equity Share Capital
Eq. Share Warrants & App. Money
Total Reserves
Net Worth
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY14
3,901,170
8.3
3,592,400
92.1
308,770
7.9
87,890
220,880
32,060
89,360
278,180
58,340
21.0
219,840
219,840
4.7
5.6
FY14
32,320
170
1,938,420
1,970,910
854,810
122,150
2,947,870
2,225,650
1,131,590
1,094,060
417,160
894,620
1,269,990
429,320
106,640
332,240
401,790
727,960
686,290
41,670
542,030
2,947,870
FY15
3,290,760
-15.6
2,974,740
90.4
316,020
9.6
84,880
231,140
23,670
87,210
294,680
67,490
22.9
227,190
227,190
3.3
6.9
FY15
32,360
170
2,129,230
2,161,760
976,170
126,770
3,264,700
2,360,620
1,214,990
1,145,630
757,530
1,125,730
948,960
365,510
46,610
115,710
421,130
713,150
650,570
62,580
235,810
3,264,700
FY16
2,331,580
-29.1
1,938,110
83.1
393,470
16.9
85,900
307,570
25,620
78,210
360,160
86,320
24.0
273,840
274,170
20.7
11.8
FY16
32,400
0
2,507,580
2,539,980
923,200
237,470
3,700,650
2,622,320
1,146,890
1,475,430
1,109,050
1,572,500
659,760
280,340
34,950
68,920
275,550
1,116,090
1,093,730
22,360
-456,330
3,700,650
FY17
2,420,250
3.8
1,987,690
82.1
432,560
17.9
84,650
347,910
27,230
87,090
407,770
93,520
22.9
314,250
314,250
14.6
13.0
FY17
32,510
0
2,850,620
2,883,130
1,013,030
247,660
4,143,820
2,584,480
1,053,180
1,531,300
1,341,890
1,924,500
669,770
340,180
54,720
17,540
257,330
1,323,640
1,289,780
33,860
-653,870
4,143,820
FY18
2,900,420
19.8
2,383,010
82.2
517,410
17.8
95,800
421,610
46,560
82,200
457,250
121,130
26.5
336,120
336,120
7.0
11.6
FY18
63,350
0
3,083,120
3,146,470
968,350
279,260
4,394,080
3,158,620
1,148,980
2,009,640
994,830
2,252,220
918,560
395,680
104,600
27,310
390,970
1,781,170
1,749,940
31,230
-862,610
4,394,080
FY19
3,710,190
27.9
3,127,620
84.3
582,570
15.7
105,580
476,990
97,510
94,190
473,670
122,040
25.8
351,630
351,630
4.6
9.5
FY19
63,390
0
3,989,830
4,053,220
1,571,950
473,170
6,098,340
3,286,440
1,254,560
2,031,880
1,115,570
3,315,360
1,294,640
441,440
121,100
37,680
694,420
1,659,110
1,626,450
32,660
-364,470
6,098,340
FY20E
3,659,971
-1.4
3,051,106
83.4
608,865
16.6
93,584
515,281
106,738
115,908
524,451
132,079
25.2
392,372
392,372
11.6
10.7
FY20E
63,390
0
4,325,603
4,388,993
800,000
473,170
5,662,163
4,303,820
1,555,916
2,747,904
705,962
3,149,592
1,296,933
501,366
130,355
5,190
660,021
2,238,228
2,206,010
32,218
-941,295
5,662,163
(INR M)
FY21E
4,027,404
10.0
3,305,488
82.1
721,916
17.9
106,669
615,247
105,000
90,768
601,016
151,276
25.2
449,740
449,740
14.6
11.2
(INR M)
FY21E
63,390
0
4,710,469
4,773,859
600,000
473,170
5,847,029
4,403,820
1,662,585
2,741,235
805,962
3,149,592
1,613,168
551,699
143,442
191,867
726,160
2,462,929
2,427,476
35,452
-849,760
5,847,029
5 December 2019
4
 Motilal Oswal Financial Services
Reliance Industries
Reliance Industries – Standalone Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
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
Y/E March
OP/(Loss) before Tax
Depreciation
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
E: MOFSL Estimates
FY14
34.7
48.5
326.0
FY15
35.8
49.2
357.5
43.3
31.5
4.3
3.2
33.8
0.3
2.3
11.0
8.2
13.9
1.4
1.0
41
5
72
1.3
9.8
-0.1
FY16
43.3
56.8
420.1
35.9
27.3
3.7
4.6
27.2
0.3
41.6
11.7
8.9
21.1
0.9
0.6
44
5
171
0.6
12.0
-0.3
FY17
49.6
62.9
476.8
31.3
24.6
3.3
4.5
25.0
0.4
28.7
11.6
9.1
29.6
0.9
0.6
51
8
195
0.5
12.8
-0.3
FY17
407,770
84,650
-93,520
146,160
545,060
10,190
555,250
-373,360
181,890
-352,000
-725,360
70,638
89,830
-41,738
118,730
-51,380
68,920
17,540
FY18
53.0
68.1
520.4
29.2
22.8
3.0
3.7
20.8
0.3
71.8
11.1
9.2
31.3
0.9
0.7
50
13
220
0.5
9.1
-0.4
FY19
55.5
72.1
670.3
28.0
21.5
2.3
3.1
19.5
0.4
-13.4
9.8
8.7
25.8
1.1
0.6
43
12
160
0.8
4.9
-0.4
FY20E
61.9
76.7
725.9
25.1
20.2
2.1
2.9
17.5
0.5
99.4
9.3
8.7
22.5
0.9
0.6
50
13
220
0.6
4.8
-0.5
FY20E
524,451
93,584
-132,079
544,335
1,030,291
0
1,030,291
-400,000
630,291
165,768
-234,232
0
-771,950
-56,599
-828,549
-32,490
37,680
5,190
FY21E
70.9
87.8
789.5
21.9
17.7
2.0
2.5
14.2
0.6
71.2
9.8
10.0
26.3
0.9
0.7
50
13
220
0.7
5.9
-0.6
(INR M)
FY21E
601,016
106,669
-151,276
95,142
651,551
0
651,551
-200,000
451,551
0
-200,000
0
-200,000
-64,874
-264,874
186,677
5,190
191,867
0.3
-8.5
11.7
9.2
12.7
1.8
1.3
40
10
64
1.7
6.9
-0.2
FY14
278,180
87,890
-58,340
-51,630
256,100
220
256,320
-310,470
-54,150
-369,530
-680,000
-16,450
309,580
-32,680
260,450
-163,230
495,470
332,240
FY15
FY16
294,680
360,160
84,880
85,900
-67,490
-86,320
174,450
560,590
486,520
920,330
4,620
110,700
491,140 1,031,030
-476,820
-767,220
14,320
263,810
-231,110
-446,770
-707,930 -1,213,990
-750
141,380
36,600
31,790
-35,590
-37,000
260
136,170
-216,530
-46,790
332,240
115,710
115,710
68,920
FY18
FY19
457,250
473,670
95,800
105,580
-121,130
-122,040
218,510
-487,770
650,430
-30,560
31,600
193,910
682,030
163,350
-227,080
-248,560
454,950
-85,210
-327,720 -1,063,140
-554,800 -1,311,700
-33,620
597,940
-44,680
603,600
-39,160
-42,820
-117,460 1,158,720
9,770
10,370
17,540
27,310
27,310
37,680
5 December 2019
5
 Motilal Oswal Financial Services
Reliance Industries
Reliance Industries – Consol. Financials and Valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT.
Total Tax
Tax Rate (%)
Minority Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY14
4,344,600
9.4
3,996,610
92.0
347,990
8.0
112,010
235,980
38,360
90,010
287,630
62,150
21.6
550
224,930
224,930
7.7
5.2
FY15
3,754,350
-13.6
3,380,710
90.0
373,640
10.0
115,470
258,170
33,160
86,130
311,140
74,740
24.0
740
235,660
235,660
4.8
6.3
FY16
2,739,990
-27.0
2,322,950
84.8
417,040
15.2
115,650
301,390
36,910
122,890
387,370
88,760
22.9
1,160
297,450
297,450
26.2
10.9
FY17
3,053,820
11.5
2,591,880
84.9
461,940
15.1
116,460
345,480
38,490
93,350
400,340
102,010
25.5
-680
299,010
299,010
0.5
9.8
FY18
3,916,770
28.3
3,275,010
83.6
641,760
16.4
167,060
474,700
80,520
88,620
482,800
133,460
27.6
-11,460
360,800
360,800
20.7
9.2
FY19
5,671,350
44.8
4,832,170
85.2
839,180
14.8
209,340
629,840
164,950
86,350
551,240
153,900
27.9
-1,030
398,370
398,370
10.4
7.0
FY20E
6,245,811
10.1
5,278,646
84.5
967,164
15.5
212,154
755,010
205,595
117,187
666,602
178,698
26.8
-1,580
489,484
489,484
22.9
7.8
FY21E
7,139,652
14.3
5,846,345
81.9
1,293,307
18.1
241,717
1,051,590
218,601
98,514
931,503
234,459
25.2
-680
697,724
697,724
42.5
9.8
(INR M)
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Eq. Share Warrants & App. Money
Total Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY14
29,400
170
1,957,300
1,986,870
9,590
1,387,610
119,250
3,503,320
2,610,190
1,196,020
1,414,170
0
914,940
606,020
1,353,300
567,200
94,110
379,840
312,150
785,110
608,600
129,150
47,360
568,190
3,503,320
FY15
29,430
170
2,155,390
2,184,990
30,380
1,682,510
129,740
4,027,620
2,844,690
1,324,080
1,520,610
43,970
1,664,620
764,510
1,051,150
532,480
53,150
125,450
340,070
1,017,240
594,070
353,710
69,460
33,910
4,027,620
FY16
FY17
FY18
FY19
29,480
29,590
59,220
59,260
80
0
0
0
2,286,000 2,607,500 2,875,840 3,811,860
2,315,560 2,637,090 2,935,060 3,871,120
33,560
29,170
35,390
82,800
1,947,140 1,836,760 1,816,040 2,719,420
204,940
211,980
245,430
499,230
4,501,200 4,715,000 5,031,920 7,172,570
3,312,450 3,564,010 5,775,450 5,867,840
1,505,890 1,627,670 1,794,730 2,004,070
1,806,560 1,936,340 3,980,720 3,863,770
42,540
48,920
58,130
119,970
2,286,970 3,248,370 1,870,220 1,794,630
840,150
856,070
855,300 2,423,010
1,013,750
978,320 1,348,360 1,822,680
464,860
489,510
608,370
675,610
44,650
81,770
175,550
300,890
110,280
30,230
42,550
75,120
393,960
376,810
521,890
771,060
1,488,770 2,353,020 3,080,810 2,851,490
602,960
765,950 1,068,610 1,083,090
855,750 1,545,850 1,970,820 1,721,100
30,060
41,220
41,380
47,300
-475,020 -1,374,700 -1,732,450 -1,028,810
4,501,200 4,715,000 5,031,920 7,172,570
FY20E
59,260
0
4,244,319
4,303,579
82,800
2,799,420
499,230
7,685,029
7,603,544
2,216,224
5,387,320
119,970
658,926
2,423,010
2,226,491
738,034
331,368
307,927
849,162
3,130,688
1,183,164
1,895,433
52,091
-904,197
7,685,029
FY21E
59,260
0
4,860,758
4,920,018
82,800
2,879,420
499,230
8,381,468
8,330,685
2,457,941
5,872,744
119,970
331,785
2,423,010
3,170,603
817,407
378,790
1,003,720
970,686
3,536,644
1,310,409
2,166,689
59,546
-366,041
8,381,468
(INR M)
5 December 2019
6
 Motilal Oswal Financial Services
Reliance Industries
Reliance Industries – Consol. Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
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
Consolidated - Cash Flow Statement
Y/E March
PBT
Depreciation
Tax paid
Change in deferred tax liability
Change in net working capital
Misc
Operating cash flow
Capex
Change in investments
Investing cash flows
Change in borrowings
Misc
Issuance of equity
Dividend paid
Financing cash flow
Net change in cash
Closing cash balance
E: MOFSL Estimates
FY14
38.0
56.9
335.3
4.7
14.5
FY15
39.8
59.3
368.7
5.0
15.1
39.0
26.2
4.2
2.9
28.8
0.3
11.3
7.2
12.8
1.3
0.9
52
5
58
1.0
7.8
0.4
FY16
50.2
69.7
390.7
5.2
12.4
30.9
22.2
4.0
4.0
26.4
0.3
13.2
8.0
17.0
0.8
0.6
62
6
80
0.7
8.2
0.4
FY17
50.5
70.1
445.0
5.5
13.0
30.7
22.1
3.5
3.6
23.8
0.4
12.1
7.5
27.9
0.9
0.6
59
10
92
0.4
9.0
0.4
FY18
60.9
89.1
495.3
6.0
11.9
25.5
17.4
3.1
2.8
17.1
0.4
13.0
8.8
24.2
0.7
0.8
57
16
100
0.4
5.9
0.3
FY19
67.2
102.5
653.2
6.5
11.6
23.1
15.1
2.4
2.1
14.1
0.4
11.7
9.1
17.7
1.0
0.8
43
19
70
0.6
3.8
0.1
FY20E
82.6
118.4
726.2
8.0
11.6
18.8
13.1
2.1
1.9
12.1
0.5
12.0
9.3
15.4
0.8
0.8
43
19
69
0.7
3.7
0.0
FY20E
666,602
212,154
-178,698
0
108,194
1,580
809,832
-600,000
0
-600,000
80,000
0
0
-57,025
22,975
232,807
307,927
FY21E
117.7
158.5
830.2
11.4
11.6
13.2
9.8
1.9
1.5
8.6
0.7
15.1
11.6
17.6
0.9
0.9
42
19
67
0.9
4.8
-0.1
(INR M)
FY21E
931,503
241,717
-234,459
0
157,637
680
1,097,077
-400,000
0
-400,000
80,000
0
0
-81,285
-1,285
695,793
1,003,720
0.3
11.8
8.2
11.6
1.7
1.2
48
8
51
1.7
6.2
0.2
FY14
FY15
FY16
FY17
287,630
311,140
387,370
400,340
112,010
115,470
115,650
116,460
-62,150
-74,740
-88,760
-102,010
3,370
10,490
75,200
7,040
62,330
279,890
493,760
819,630
-550
-740
-1,160
680
402,640
641,510
982,060 1,242,140
-606,730 -1,015,560 -1,022,520 -1,214,020
-177,540
-158,490
-75,640
-15,920
-784,270 -1,174,050 -1,098,160 -1,229,940
315,420
294,900
264,630
-110,380
100
20,790
3,180
-4,390
-25,930
-1,950
-129,880
61,469
-32,680
-35,590
-37,000
-38,949
256,910
278,150
100,930
-92,250
-124,720
-254,390
-15,170
-80,050
379,840
125,450
110,280
30,230
FY18
FY19
482,800
551,240
167,060
209,340
-133,460
-153,900
33,450
253,800
370,070
-671,070
11,460
1,030
931,380
190,440
-842,500
-78,640
770 -1,567,710
-841,730 -1,646,350
-20,720
903,380
6,220
47,410
-20,020
584,100
-42,810
-46,410
-77,330 1,488,480
12,320
32,570
42,550
75,120
5 December 2019
7
 Motilal Oswal Financial Services
Reliance Industries
NOTES
5 December 2019
8
 Motilal Oswal Financial Services
Reliance Industries
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
5 December 2019
9
 Motilal Oswal Financial Services
Reliance Industries
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, 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 MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
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Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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