Friday, October 17, 2008

Why is Reliance under pressure?

Market participants are saying Reliance Industries is no longer under conviction list despite cheap valuation.

The cut in FY09-FY10E EPS due to the D6 gas output delay is likely to be around 4-9%.

D6 gas output is now likely to start by end-November 2008 as against the earlier expectation of 2Q08.

OTHER HIGHLIGHTS

Benchmark Singapore GRM at US$5.4/bbl is down 15% YoY

Q2 profit growth expected to be in the range of 7-8%

Petrochemical margin expected to remain muted for full year

FII Shareholding

Sept 2008 16.97%

June 2008 17.11%

March 2008 17.83%

Dec 2007 18.72%

Sept 2007 20.64%


TECHNICAL VIEW

Reliance trading at lowest level seen in February 2007

Trading below 200-DMA since May 9, 2007

Reliance traded above 200-DMA from May 2005

Annualised volatility increased to 74.64 in futures market

Price Performance

Reliance Ind Sensex

1 Month -28% -10.71%

YTD -52% -43.40%

From 52-week high -57% -50.40%


VALUATION

PE at FY09 PE for FY10

At current Price 12.11x 7.75x

One mth back 16.91x 10.83x

YTD 28.26x 18.56x

From 52-week high 25.27x 16.18x


Brokerage EPS FY 09Estimate

Now Earlier Change

CLSA 120.50 124.00 Down

ENAM 106.70 111 Down

Macquarie 109.54 115.50 Down

Motilal 111.80 109.90 Up

Kotak 105.80 97.40 Up

Credit Suisse 103 114 Down

JPMorgan 115.87 119.41 Down

Edelweiss 104.90 100.20 Up

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