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Tuesday, January 22, 2013

Reliance Industries - What should you do with stock?

Some notes meant to provide guidance on what to do with stock of Reliance Industries, especially after the recent rally in stock.

The recent rally in Reliance Industries was driven by a possible increase in gas price and E&P approvals to re-start the drilling activities. Refining margins for company were better than expected in 3QFY13. Petchem remained flat with little signs of near term demand revival.

Possible upside in stock price is expected from the gas price hike. Recent initiatives by the government of India enable the company to renew exploration activities in key
fields.

The initial E&P results will take six to twelve months, after which a case for a possible reserve upgrade could be made. While petchem capacity additions are a step in the right direction, the then macro mood will determine EBITDA growth but will be hard to predict.

One may 'hold stocks’ of Reliance Industries in portfolio if already owned.

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