Red Flags in Reliance Industries Q2 FY 2018 Result

While analysts are cheering trying to justify why Reliance Industries stock price should get re-rated, I found the balance sheet which was with the result release to be quite scary. I have encircled the items which seems to be looking not good for the shareholders:

Current Asset to Current Liabilities, which measure the liquidity position of a company stood at 0.58 in Sep 2017 vs 0.62 in March 2017. Any figure which is less than 1 is not very healthy. It is approaching half which in my view is a cause of worry.

Very Low Interest Payout: Non current and current financial liabilities (including trade payable) put together is roughly 3.99 lakh crores while the interest outgo in the second quarter of FY-18 was only 2272 crores which is just 0.57% for 3 months. No body gets loan at less than 2.3% per annum. So the interest outgo is bound to go up very significantly in coming years when the interest capitalization is stopped and the trade payable(> 84000 crores) are paid / reduced.

Reliance Industries: Do not buy on dips

If you have listened to the crap analysts on business news channel who were recommending Reliance Industries to be bought at every dip, you have many reasons to worry now. Here are some of them:

1. Very low Gas price hike than anticipated: Analysts were almost sure that gas prices will be hiked to $8.4 per MMBTU and Reliance Industries will make a killing even though it could not fulfill its commitment of producing agreed amount of gas every year. Now the govt has finally hiked the price but far lower that what was discounted in the stock price to just $5.6 per MMBTU. 

2. No benefit of gas price hike to RIL: However small a price hike of more than 30% is positive though less positive than what was anticipated. But what's severely worrying for Reliance Industries is that govt. has denied the benefit of even this price rise to the company. It will have to continue to sell gas at the rate of $4.2 per MMBTU untill the shortfall is delivered.

Reliance Industries Q1 FY - 2014 Result Analysis

Reliance Industries (RIL) has announced first quarter results which were inline with street expectations with slight disappointment on GRM front. Following are the key takeaways from the RIL's Q1 FY - 2014 results.

Net profit in Q1 FY - 2014 is lower than previous quarter (Q4 FY-2013). The refining giant reported Rs 5,589 crore in March 2013 while it posted Rs 5,352 crore in June 2013.

Buy RIL on dips in the range 770 - 780

• Reliance Industries witnessing strong support in 765 to 770 band and has bounced back many times from those levels in past 10 months.

• Fundamentally the outlook beyond 2014 looks positive as the gas price agreement will be over and there could be good amount of increase in per mmbtu prices

• The stock is attractively valued based on FY-15 EPS

• Has been an underperformer since last 3 - 4 years which has resulted in significant base building for the stock.

• Fundamentally or technically the stock seems to have limited downside below 760 levels.

Sell Reliance Industries JAN 960 CALL Option at 3.70

RIL posted good Q3 numbers which received positive response from the investors. However the stock seems to be getting tired at upper levels as it has already run up significantly from 840 odd levels to 920. Fundamentally the stock seems to be reasonably valued at current levels. Also the buyback program is over which was earlier supporting stock at lower levels. Hence considering all these factors one can sell 960 CALL option of the stock at current market premium of 3.70

Considering one is able to sell the JAN CALL option of RIL 960 strike price at current market premium of 3.70 he can generate following return from this trade:

Reliance Industries (RIL) Q2 FY 2012 - 2013 Result and Valuation Analysis

Mukesh Ambani's flagship company Relaince Industries reported a 6% fall in net profit at Rs 5,376 crores YoY but a rise of 20% QoQ inline with street expectations. The company reported a net profit of Rs 5,703 crore in the same period a year ago. 

However, total income in the second quarter of current financial year 2012 - 2013 increased 16% to Rs 92,447 crore as against Rs 79,671 crore a year ago. The GRM for the quarter stood at $9.5 per barrel also in line with expectations. 

For the full year RIL is expected to do a PAT of around 21,000 crores which values the company, at the current market price of Rs.825, at a PE multiple of around 12.7 times which seems reasonable and neither cheep nor expensive due the recent run up in stock price from 700 levels to 840 levels and issues related to KG D6.

Reliance Industries (RIL) buyback Update

As expected, the recent fall in stock markets is not affecting RIL stock price as much due to the fact that on any massive fall RIL does aggressive buying of it's own shares under the ongoing buyback programme. As on May 24, RIL had purchased a total of 19.22 million shares. 

Rough calculations show the company has so far bought shares worth Rs 1,364 crore, about 13 per cent of the maximum buyback amount. RIL’s Rs 10,440-crore buyback offer is the largest ever in India Inc’s history. The programme started on February 7 and is scheduled to continue till January 19, 2013.

Though the buyback program began in February, it gained momentum only in May. The company picked up 12 million shares in May 2012 as against three million in April. Interestingly, 25 percent of the share trading volume in the RIL counter this month has come from the buyback.

InvestorZclub believes that the stock is looking attractive in terms of valuations and Rs 680 to 700 range should act as strong support zone. 

Sell Reliance Industries 640 Put Option at Rs.3

Option traders can consider selling 640 Put option of Reliance Industries (May Expiry) at the current market premium of Rs. 3.00. This trade would generate more than 3 percent return in less than 20 days. However it must be noted that if RIL falls below 637 then there would be loss of Rs. 250 on every rupee fall in the stock for each lot (RIL lot size 250).

Following are the details of the trade:

Trading Idea: January 2012

The recent developments in the stock market globally suggest that we are amidst a short term rally. Indian stock markets too witnessing some buying interest because of global rally and rupee appreciation against USD.

Considering this InvestorZclub is recommending following trade:  

Reliance Industries (RIL) Q2 FY 2011 - 2012 Result Analysis

Reliance Industries Ltd (RIL) saw its net profit jump 16% to Rs 5,703 crore for the quarter ended September 30, 2011, from Rs 4,923 crore in the corresponding quarter a year ago.

The gross refining margin for the company stood at $10.1 per barrel.

The total income increased 37% to Rs 79,671 crore in Q2 of current fiscal, from Rs 58,151 crore for Q2 of last fiscal. Its turnover rose to Rs 80,790 crore in the second quarter (Q2) of the current fiscal, as against Rs 59,962 crore in the same period a year ago, the company said in a statement.

RIL looses crown, coal india becomes most valued firm

Coal India (CIL) today toppled billionaire Mukesh Ambani-led Reliance Industries (RIL) as the country's most valued company.

At the end of the trading day Coal India Ltd market capitalization was Rs. 251,298 crores while that of Reliance Industries was Rs. 247,106.5 crores.

Reliance Industries Taking over Aircel?

Billionaire Mukesh Ambani-controlledReliance Industries is conducting an advanced due diligence exercise on telecom services provider Aircel, three people said on condition of anonymity. Reliance Industries has completed at least three rounds of due diligence on Aircel and may offer to buy a controlling stake in the company if talks between the two sides result in a deal.

UBS view on RIL bullish

UBS is very positive on RIL and recommends a buy at the current market price for a target of Rs. 1170 in one year time frame. 

Reliance Industries hits 52 week low

Reliance Industries, India's largest listed company, slipped more than 1.7% on Thursday to a new year-low of Rs 885.05. Reliance has been under pressure in recent months on worries of slowing gas output from its KG blocks, off India's eastern coast.

Related articles on Reliance Industries:

Buy Reliance Industries

RIL 5 year snapshot

Reliance Advance Tax

RIL block deal

RIL Q1 Advance Tax Payment

I-T department sources said today that oil and gas major RIL has paid Rs 900 crore in the April-June, 2011 period, up nearly 50% from Rs 650 crore in the same quarter previous fiscal. A 50% rise in advance tax payment holds the hope that RIL might do better than expected result in Q1 of fiscal year 2012.

RIL has been an underperformer in last few trading sesions and has fallen to 900 levels from 950 odd levels in 4 trading sessions. RIL has strong support at 850-900 band and many brokerages have given buy rating on the stock in that band for a 1 year target of 1100.

http://investorzclub.blogspot.com/2011/05/buy-reliance-industries-recommends.html.

Company Snapshot - Reliance Industries (2007 - 2011)

Reliance Industries is India's most valued company in terms of Market capitalization. It operates mainly in three segments: Refining, Petrochemicals and Oil & gas exploration. Other business of Reliance includes Textile and Retail.

Following is the five year snapshot of RIL's financials and shareholder's return. 

RIL enters Insurance business

Bharti group today exited from its financial services joint ventures with French firm AXA and sold its entire 74% stake in both general and life insurance businesses to Mukesh Ambani-led Reliance Industries (RIL) for an undisclosed amount.

Buy Reliance Industries - Recommends InvestorZclub

Reliance Industries stock has corrected significantly in the past few trading sessions and the risk reward ratio has become favourable for fresh investing in the stock.

The Refining and petrochemical business segments of the company is doing very well. The underperformance on its exploration business is expected to get better soon, thanks to the recent deal with British Petroleum. Also the lower gas production from KG basin is expected to get better in next one year which will be a big sentiment booster for the stock.

On the valuation side, at the current market price of around Rs 900,

Reliance Industries block deal

Reliance Industries(RIL) today witnessed a huge block deal of 65 lakh shares at Rs 945 per share.

The stock is down more than 10% in last 10 trading sessions. On one year basis the stock has given a negative return of close to 8%.