How Reliance Industries moves before, on and one-week after AGM

 
Sagar Salvi, Riken Mehta
moneycontrol.com

The Reliance Industries ' Annual General Meeting (AGM) has always been a big event for the company's shareholders, prospective investors and traders.

However, chairman Mukesh Ambani's plans to invest Rs 150,000 crore over the next 3 years failed to cheer the Reliance Industries stock as it ended the session on Thursday a percent down.

Reliance, India's fourth biggest company by market value, has been under pressure from investors over its slowing gas business and its drive into consumer-focused sectors such as telecoms and retail.

Remaining tightlipped, Ambani gave away few details of his plans for the long-anticipated launch of 4G telecommunications services, which was a big disappointment for the street.

Below is a historical chart of how RIL stock has moved before, on and one-week after AGM in the last five years.

How brokerages view Reliance Industries-BP oil find

Riken Mehta
Moneycontrol Bureau

Reliance Industries  (RIL) on Friday announced a huge natural gas discovery, possibly the biggest find ever, in the flagging eastern offshore KG-D6 block that will be crucial in arresting its falling gas output. The company has not disclosed estimates but media reports have suggested that reserves may be more than pre-drill best estimate of 1.2 trillion cubic feet equivalent.

Brokerage house Goldman Sachs has reiterated its 'Buy' rating on Reliance Industries with 12-month sum of the parts based target price of Rs 1,070 citing RIL’s capex in core segments that will lift its cash returns over the medium term.

"The announced discovery looks significant given that the largest D6 discovery had a gross hydrocarbon column of 194 mts (MA-2 well). Moreover, if this discovery leads to a new commercial reservoir, it could meaningfully add to D6 reserves, in our view. Overall, we believe, this discovery further strengthens our view that RIL’s E&P business is turning around," said the Goldman Sachs note to clients.

Brokerage house Barclays has retained its 'equalweight'rating on Reliance Industries with a target price of Rs 870 pending more clarity on MJ-1’s key parameters.

"We hypothesize that MJ-1 could be worth USD 2.5 billion (USD 8.1/boe) based on 1.5tcf and 60million barrels, USD 1.9 billion capex (USD 6/boe), a FY17 start-up and assuming that it is not ring-fenced. This translates to Rs 28 per share for Reliance’s 60% share. Niko (10% share) was up 23% on Friday adding USD 100m in market-cap or Rs 11 per share for Reliance’s 60 percent share," said the Barclays note to clients.

CLSA too has retained its 'outperform' rating on the stock citing final decision on doubling of gas price as the next key trigger in FY14.

"Reliance’s first exploration well after a near two year exploration hiatus has been announced as a “significant” gas and condensate discovery. Based on our estimated value of USD 4/boe for development upside from a gas and liquid discovery, this could a value of USD 650 million for ever 1TCF i.e. Rs 8 per share for Reliance’s 60 percent stake. We note that Niko added USD 92mn to its market cap on the back of this discovery given its 10 percent stake. Pertinently, sharp movement in Niko’s stock implies a possible addition of Rs 12 per share for Reliance," said the CLSA note.

Chart of the day: Is RIL's buyback programme a hit so far?

Riken Mehta
Moneycontrol Bureau

Reliance shares continue to flounder even as the company is buying back shares from the market. When the company had announced the share buyback, investors were hopeful that it would act as a good support at lower levels. However, with uncertainty over gas output persisting, investors appear to be using every rise in stock price to book profits. RIL has so far bought back 3.18 crore shares since 14th February, 2012. It touched a 52-week low of Rs 671 on 8th May.