| Y/E March (` cr) | 4QFY2011 | 4QFY2010 | % chg (yoy) | Angel Estimates | Variation (%) |
| Net Operating Income | 72,674 | 57,570 | 5.2 | 77,162 | -5.8 |
| EBITDA | 9,843 | 9,154 | 21.7 | 10,599 | -7.1 |
| EBITDA Margin (%) | 13.5 | 15.9 | 15.7 | 13.7 | -0.2 |
| Adj. PAT | 5,376 | 4,710 | 28.1 | 5,659 | -5.0 |
RIL reported 14.1% yoy growth in bottom-line to `5,376cr (`4,710cr) backed by better performance by Refining and Petrochemical segment. However, on a sequential basis, PAT grew by 4.7%, which was below our expectation on account of lower-than-expected refining margins. RIL’s top-line during the quarter increased by 26.2% yoy to `72,674cr (`57,570cr) primarily on the back of 22.3% yoy growth in refining revenues to `62,704cr (`51,250cr) and 17.8% yoy increase in the petchem segment's revenue to `18,194cr (`15,448cr). Growth in the refining segment was due to higher crude price. Crude oil processed during the quarter was flat yoy at 16.7mn tonnes. RIL GRMs were higher sequentially at US $9.2/bbl (US $9/bbl), lower than our expectation of US $10/bbl. Benchmark complex Singapore margins during the quarter stood at US $7.4/bbl. Thus, RIL managed to earn a spread of US $1.8/bbl. On the petchem side, this was the best ever quarter for the company in EBIT terms. Petrochemical EBIT margins during the quarter stood lower qoq at 14.4% (15.2%) due to base effect of higher revenues. Thus, OPMs on a qoq basis contracted by 242bp to 13.5% (16%). On a yoy basis as well, OPMs contracted by 233bp yoy to 13.5% (15.9%) on account of dip in production of natural gas at KG basin. Other income and Interest expenditure during the quarter increased by 49.1% and 32.6% yoy to `917cr and `696cr, whereas depreciation was flat yoy at `3,387cr. Thus, PAT increased by 14.1% yoy to `5,376cr (`4,710cr).
4QFY2011 Performance (Standalone)
| Y/E March (Rs cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) | FY2011 | FY2010 | % chg (yoy) |
| Net Operating Income | 72,674 | 59,789 | 21.6 | 57,570 | 26.2 | 248,170 | 192,461 | 28.9 |
| COGS | 57,533 | 45,008 | 27.8 | 43,304 | 32.9 | 189,991 | 143,971 | 32.0 |
| Total operating expenditure | 62,831 | 50,244 | 25.1 | 48,434 | 29.7 | 210,044 | 161,880 | 29.8 |
| EBITDA | 9,843 | 9,545 | 3.1 | 9,136 | 7.7 | 38,126 | 30,581 | 24.7 |
| EBITDA Margin (%) | 13.5 | 16.0 | 15.9 | 15.4 | 15.9 | |||
| Other Income | 917 | 741 | 23.8 | 615 | 49.1 | 3,052 | 2,460 | 24.1 |
| Depreciation | 3,387 | 3,359 | 0.8 | 3,392 | (0.1) | 13,608 | 10,497 | 29.6 |
| Interest | 696 | 549 | 26.8 | 525 | 32.6 | 2,328 | 1,997 | 16.6 |
| Extraordinary Items | - | - | #DIV/0! | - | #DIV/0! | - | - | #DIV/0! |
| PBT | 6,677 | 6,378 | 4.7 | 5,834 | 14.4 | 25,242 | 20,547 | 22.9 |
| PBT Margin (%) | 9.2 | 10.7 | 10.1 | 10.2 | 10.7 | |||
| Total Tax | 1,301 | 1,242 | 4.8 | 1,124 | 15.7 | 4,956 | 4,311 | 15.0 |
| % of PBT | 19.5 | 19.5 | 19.3 | 19.6 | 21.0 | |||
| PAT | 5,376 | 5,136 | 4.7 | 4,710 | 14.1 | 20,286 | 16,236 | 24.9 |
| Exceptional items | - | - | - | - | - | |||
| Adj. PAT | 5,376 | 5,136 | 4.7 | 4,710 | 14.1 | 20,286 | 16,236 | 24.9 |
| PAT Margin (%) | 7.4 | 8.6 | 8.2 | 8.2 | 8.4 |
Source: Company, Angel Research
Segmental break-up (Standalone)
| Y/E March (Rs Cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) | FY2011 | FY2010 | % chg (yoy) |
| Revenues | ||||||||
| Petrochemicals | 18,194 | 15,962 | 14.0 | 15,448 | 17.8 | 63,155 | 55,251 | 14.3 |
| Refining & Marketing | 62,704 | 52,524 | 19.4 | 51,250 | 22.3 | 215,431 | 163,249 | 32.0 |
| Oil & Gas | 4,104 | 4,178 | (1.8) | 4,318 | (5.0) | 17,250 | 12,649 | 36.4 |
| Others | 173 | 180 | (3.9) | 128 | 35.2 | 615 | 398 | 54.5 |
| Gross Revenue | 85,175 | 72,844 | 16.9 | 71,144 | 19.7 | 296,451 | 231,547 | 28.0 |
| EBIT | ||||||||
| Petrochemicals | 2,626 | 2,429 | 8.1 | 2,222 | 18.2 | 9,305 | 8,581 | 8.4 |
| Refining & Marketing | 2,509 | 2,436 | 3.0 | 1,986 | 26.3 | 9,172 | 6,011 | 52.6 |
| Oil & Gas | 1,569 | 1,504 | 4.3 | 1,702 | (7.8) | 6,700 | 5,413 | 23.8 |
| Others | 9 | 9 | 0.0 | 12 | (25.0) | 33 | 43 | (23.3) |
| Total EBIT | 6,713 | 6,378 | 5.3 | 5,922 | 13.4 | 25,210 | 20,048 | 25.7 |
| EBIT Margin (%) | ||||||||
| Petrochemicals | 14.4 | 15.2 | 14.4 | 14.7 | 15.5 | |||
| Refining & Marketing | 4.0 | 4.6 | 3.9 | 4.3 | 3.7 | |||
| Oil & Gas | 38.2 | 36.0 | 39.4 | 38.8 | 42.8 | |||
| Others | 5.2 | 5.0 | 9.4 | 5.4 | 10.8 | |||
| Total | 7.9 | 8.8 | 8.3 | 8.5 | 8.7 |
Source: Company, Angel Research
Outlook and Valuation: RIL’s extant business (Refining & Petrochemical) have been doing quite well and we expect company to report higher refining margins in the coming quarters as its FCCU of the DTA Refinery has started. On the petchem side, we don’t expect margins to fall below the current level. However, there are some concerns on the KG basin gas output. But we believe that RIL deal with BP deal is a positive one as the combined expertise of both the parties will result into optimisation of producing blocks and enhancement of resources in exploratory blocks. Thus, timely ramp up in the producing fields would improve investor confidence and lead to factor other prospective basins also. We maintain a Buy on RIL, with a SOTP based Target Price of `1,189.
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