Indian stock report - Reliance Industries

INDIA

UPDATE: Reliance Industries in its biggest weekly gain in 2 months post AGM July 26, 2017 15:30 IST

NEWS BITES - BRIC

Reliance Industries Ltd. (NSE:RELIANCE), India's largest Integrated oil & gas company by market cap, has increased Rs20.60 (1.3%) from its last trading session of July 25 to close at Rs1,622.75. Compared with the BSE SENSEX Index which rose 154.2 points (0.5%) in the day, the relative price increase was 0.8%. The volume was 0.6 times the average daily trading volume of 9.3 million shares. In the past week the shares have climbed 5.9%, the biggest weekly gain since June 20.

APPOINTMENT OF INDEPENDENT DIRECTOR

The company appointed Shumeet Banerji as independent director on Saturday, July 22.

AGM

Reliance Industries has lifted 2.4% over the 3 trading sessions since the annual general meeting (AGM) on Friday, July 21.

RELIANCE INDUSTRIES ISSUED NEW PATENT IN THE WEEK OF JULY 25, 2017

Continuous polymerization process using intensely stirred vessels [9,714,321]

A continuous process for manufacturing a polyester includes introducing reactant components including a terephthalic acid slurry having an ethylene glycol to terephthalic acid molar ratio of about 2 and a TiO.sub.2 slurry to an initial reactor vessel and stirring the reactant components at greater than 0 to 200 rpm to form an oligomer; transferring the oligomer, phosphoric acid, and at least one additive (carbon black, 5-sulfoisophthalic acid, 5-sulfoisophthalic acid dimethyl ester, and/or 5-sulfoisophthalic acid diglycolate) to an intermittent reactor vessel and stirring at 400 rpm to 1000 rpm to form an intermediate, wherein the oligomer, the at least one additive, and the phosphoric acid have a residence time of from 1 minute to 5 minutes in the intermittent vessel; and polymerizing the intermediate in a final reactor vessel at a temperature of 285.degree. C. to 320.degree. C., and in the absence of a polyethylene glycol, to obtain the polyester.

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SECTION 1

RELIANCE INDUSTRIES BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.7. Compared with the rest of the market the stock is undervalued.

+ The company is cash rich with Cash to Market Capitalisation at 11.6%.

+ Interest cover defined by EBIT/I is 11.4 times. This indicates it is less leveraged.

+ Net profit margin has averaged 8.3% in the last 3 years. This is better than the sector average of 8.1% and suggests a high margin of safety.

+ Brandirectory have estimated Reliance Industries brand value at Rs396.2 billion (US$6.1 billion). The Brand Value represents 5.5% of the estimated Enterprise Value of Rs7,141.9 billion (US$110.7 billion).

1.2 Undervaluation [compared with sector average]:

+ Price/Earnings of 16 [17.7]. We estimate Reliance Industries stock is trading at a current year P/E of 15.6 and a forward year P/E of 13.8.

1.3 Technicals:

Uptrend: The stock continues its significant uptrend.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 1,552.22 minus the 26-day EMA of 1,494.26 is positive 57.96 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ Rises to Falls: in the past month the number of rises outnumbered falls 15:7 or 2.1:1.

+ The stock has seen a rally of 59% in less than 6 months.

+ The present value of Rs1,000 (PV1000) invested one year ago in Reliance Industries is Rs1,608, comprising a capital gain of Rs596 and dividend reinvested of Rs12.

PV10001-week1-month1-year
RELIANCE.NSE1,0591,1461,608
BSE SENSEX Index1,0141,0361,157

+ The present value of INR1,000 (PV1000) invested ten years ago in Reliance Industries is Rs1,836, including a capital gain of Rs767 and dividend reinvested of Rs68.

+ 10 years Multiplier in INR = 1.836x

+ Compound Annual Growth Rate (CAGR) in INR = 6.3%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in Reliance Industries is $US1,147, including a capital gain of $US105 and dividend reinvested of $US43.

+ 10 years ago USD 1 equalled INR 40.3226

+ 10 years Multiplier in USD = 1.147x

+ Compound Annual Growth Rate (CAGR) in USD = 1.4%

Jul 26, 2017: USD 1 equals INR 64.52

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverRs9.3 billion (US$144.8 million)In Top 1%
Price/MAP501.15In Top 9%
Price/MAP2001.35In Top Quartile
Volatility %1.8In Top Quartile
Cash to MCap %11.6In Top Quartile

SECTION 2

RELIANCE INDUSTRIES BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 0.7%, divided by average yield of dividend yielding stocks in the BSE SENSEX Index of 1.4% is 48.6%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 7.9 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ As per the Du Pont analysis, Return on Equity of 11.3% is lower than sector average of 11.3%. This is computed as net profit margin of 8.8% times asset turnover [sales/assets] of 0.48 times leverage factor [total assets/shareholders' equity] of 2.7.

2.2 Technicals:

+ The 0.4% discount to 12-month high of Rs1,629.90 against the 75.8% premium to 12-month low of Rs923.23 suggests the climb might be peaking.

2.3 Overbought/Bearish/Resistance Signals:

+ The Relative Strength Index (RSI) of 83.0 has penetrated the overbought line of 70, suggesting the price gain of 9.6% in the last 14 days is unusually high.

+ The stock is overbought according to the Williams % R indicator of -3.6, suggesting the price is close to its 14-day high of Rs1,629.90.

+ The Money Flow Index [MFI] is 84.1 suggesting an overbought 14-day trend, being above 80. The Money Ratio of 5.3 suggests positive money flow was 5.3 times negative money flow.

2.4 Low Performance Indicator:

DescriptionValueRank In Market
EPS Growth %0.4In Bottom 1%

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Moving Annual Return

RELIANCEClose (INR)Dividends (INR)Capital Gain %% YieldAnnual Return %
July 261,622.751159.61.160.7
1 Yr ago1,016.610.50.912.0
2 Yrs ago1,007.13101.512.5
3 Yrs ago992.469.515.81.116.9

3.2 Beta:

+ Beta: the Beta of Reliance Industries stock is 0.8. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.3 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ National Stock Exchange: RELIANCE.NSE 5,018,389 [VI of 1.2] volume 87.087% of aggregate. Price: Rs1,622.75.

+ Bombay Stock Exchange: 500325.BSE 744,107 [VI of 0.1] volume 12.913% of aggregate. Day trader volume: 27.0% for the day; 73.0% for the trailing week and 64.8% for the trailing month. Price: Rs1,621.90.

+ Aggregate volume: there were 5.8 million shares of Reliance Industries worth Rs9.3 billion traded today. The aggregate volume was 0.6 times average trading of 9.3 million shares.

The turnover rate in the 12 months to date was 55.2% (or a turnover period of 1 year 9 months). This average length of ownership of the stock at 0.6 times the average holding period of 2 years 9 months for stocks in the BSE SENSEX Index suggests a slightly larger number of speculators on the share register, making it less safe for long-term investors.

SECTION 4

RANKING

4.1 Global Rank [out of 47,594 stocks] and Rank in the Asia Region [out of 22,102 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)81.8B13222
Total Assets (US$)109.6B455119
Revenue (US$)52.6B18757
Net Profit (US$)4.6B18847
Return on Equity %11.310,9685,701
Net Profit Margin %8.812,1996,195
Price to Book3.323,28112,623
Price/Earnings15.88,5984,040
Yield %0.717,5979,005
PV$1000 (1Year) US$*1,6845,7482,718
US$* Change (1Year) %60.75,7272,765

* 1 year ago USD 1 = INR 67.11

Jul 26, 2017: USD 1 equals INR 64.52

4.2 Independent Ratings

Reliance Industries Ltd. is the 8th largest company in the Platts Top 250 Global Energy Company Rankings.

It was ranked 25 in IHS Energy's list of Top 50 Energy Companies 2013; a deterioration over a year from rank 21 in 2012.

It was ranked 61 in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2015; an improvement over a year from rank 63 in 2014.

It is the 75th largest by revenue in the FT Global 500.

It is the 109th largest by revenue in the Forbes Global 2000.

It was ranked 438 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016. It had outstanding scores of 5% in Carbon productivity, 32.1% in Carbon productivity.

It is placed 700/2535 in BSS News Bites' ranking of Indian performers in the past year, a percentile ranking of 73.

SECTION 5

RELIANCE INDUSTRIES FINANCIALS

5.1 Financials Summary

Year endedMar 2017Mar 2016Mar 2015
Sales (USD B)52.647.359.5
Pretax (USD B)6.264.8
Net (USD B)4.64.63.7
EPS (INR)101.14100.7580.11

5.2 Annual Report for the year ended March 31, 2017 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Non-current inventory to Total Assets up from 28.4% to 35.2%.

+ Net tangible assets per share up 8% from INR495.08 ($US7.5) to INR534.76 ($US8.2).

Unfavourable Changes:

+ EBIT Margin down from 13.9% to 12.9%.

+ EBIT to total assets down from 7.1% to 6.2%.

+ Profit before tax to Sales down from 12.7% to 11.8%.

+ Sales and marketing expenses to Sales up from 8.7% to 9.8%.

+ Current ratio down 10.1% from 0.7 to 0.6.

+ Fixed Assets to Total Assets down from 26.3% to 23.9%.

+ Total current assets to Total Assets down from 21.3% to 20.8%.

+ Total Liabilities to EBITDA of 7.9 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 17.7% from the previous year's ratio of 6.7.

+ Total Liabilities to Operating Cash Flow of 8.9 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 7% from the previous year's ratio of 9.6.

Note:

+ EPS steady at INR101.14 ($US1.56).

+ Interest cover steady at 11.4.

+ Total revenue to total assets steady at 0.5.

+ Cost of Goods Sold to Sales up from 61.8% to 62.5%.

+ Depreciation to Sales down from 3.8% to 3.4%.

+ Tax expenses to Sales up from 2.9% to 3%.

+ Debt to Equity steady at 0.7.

+ Total liabilities to Total assets steady at 0.6.

+ Total non-current assets to Total Assets up from 78.7% to 79.2%.

+ Intangibles to Total Assets up from 14.3% to 14.9%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (Rs)
26 Jul 201711
26 Jul 201610.5
26 Jul 201510
26 Jul 20149.5

SECTION 6

RELIANCE INDUSTRIES CORPORATE BONDS

Key Statistics

MaturityYield to maturity %Yrs to Maturity% Rise/Fall 3-mo
May to Oct 20202.742.78 to 3.23-0.39

SECTION 7

RELIANCE INDUSTRIES PROFILE

7.1 Activities

Reliance Industries Limited (RIL) is India's largest private sector enterprise, with businesses in the energy and materials value chain. The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail, infotel and special economic zones. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

7.2 Industry & Sector

Classification LevelName of Sector
Industry GroupOil & Gas
IndustryIntegrated Oil & Gas
ActivityIntegrated Oil & Gas
Economic SectorEnergy
Business SectorEnergy - Fossil Fuels

7.3 Top Management

The chairman is Mukesh D Ambani.

7.4 Issued Capital

Based on 3,251,280,000 issued shares the market capitalisation is Rs5,276 billion (US$81.8 billion).

SECTION 8

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

July 26: Clarification sought from Reliance Industries Ltd

The Exchange has sought clarification from Reliance Industries Ltd with respect to news article appearing on economictimes.indiatimes.com on July 26, 2017 titled "BKC convention center: RIL defaulted on Rs 1369 cr fine & additional surcharge, says govt."

The reply is awaited.

July 24: Reliance Industries: Disclosure of Voting results of AGM (Regulation 44(3) of SEBI (LODR) Regulations, 2015)

Reliance Industries Ltd has informed BSE regarding the details of Voting results of AGM, under Regulation 44(3) of SEBI (LODR) Regulations, 2015. Kindly Click here

July 22: Reliance Industries appoints Independent Director

Reliance Industries has appointed Shumeet Banerji as Independent Director. The effective date is Saturday, July 22.

July 22: Reliance Industries: Outcome of AGM

Disclosure of events or information - 40th Annual General Meeting (Post-IPO) held on Friday, July 21, 2017

July 22: Reliance Industries: Updates

Reliance Industries: Updates

Contact: 022-22785000

Physical Address: 3/F Maker Chambers IV 222 Nariman Point Mumbai, 400 021 India

State/Province/Country: India

Country of Incorporation: India

Exchange: National Stock Exchange

ISIN: INE002A01018

NSE:RELIANCE; BSE:RELIANCE; NS:RELIANCE; IN:RELIANCE; RELI.NS

PermID: 4295872979

Reliance Industries Limited, Reliance Industries Ltd

Source: www.BuySellSignals.com