>Reliance(Morgan Stanley)

Conclusion: We reiterate our Overweight rating on
Reliance but lower our target price to Rs1,619 and
reduce our F2009e and F2010e consolidated earnings
by 15% and 13%, respectively, based on the following:

1) delayed assumptions of commercial production of
RPL to April 2009;

2) delay in peak production
assumption of oil and gas from KGD6;

3) lower GRM
estimates and net backs on global GDP cuts; and

4) a stronger dollar forecast based on our revised view on
the INR/USD exchange rate; since we believe the
currency remains over-valued on a real effective
exchange rate.

For F2011 and F2012,
we have actually raised our earnings estimates.
Our target price of Rs 1,619, based on trough historical
multiples of global comps, implies 59% potential upside.
Reliance is net long the dollar: We estimate Reliance
will have a gross profit exposure of US$12 bn to the
dollar in F2010, and for every 1% chg. in the USD vs. the
rupee, its profitability would vary 3.7%. Reliance’s
domestic gas business is also pegged to the dollar, so
the net exposure to the dollar increases in the longer
term. Our global economist believes the Indian currency
remains over-valued on a real effective exchange rate.
The India rupee has depreciated 27% YTD and our team
expects another 10% softening in the next few years.
Valuations look attractive. Reliance has fallen 50% in
the last one month in absolute terms, underperforming
the market by 22%. It trades at 5.4x F2010e earnings, a
33% discount to the market multiple, making valuation
attractive on an absolute and relative basis, compared to
global comps. Key risks: Removal of tax holiday for the
E&P business; a slowdown in global economic growth

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>Reliance(Goldman Sach)

Reliance Industries (RIL) reported 2QFY09 PAT of Rs.41.2bn, up 7% YoY, ahead of our estimate of Rs37.5bn primarily on the back of: 1) better than expected operating performance in petchem divison, and 2) refinery inventory gain of US$0.5/bbl against our estimate of US$2.0/bbl inventory loss. Refining margins of US$13.4/bbl was consequently ahead of our estimate of US$10.5/bbl. Petchem EBIT margin stood at 12.2%, up 160bp QoQ, reflecting robust product prices and low naphtha costs.
We expect the petchem margins to remain stable in the near term due to further delays in the new Middle Eastern capacities to 1Q2009, although we have a cautious outlook on refining margins. With oil production having started in 3QFY09 and gas production expected in 4QFY09, we believe that the E&P division will drive RIL earnings growth going forward.

What to do with the stock

We retain Buy rating on RIL with SOTP-based 12-month TP of Rs1,980,
implying upside potential of 63% from current levels. RIL is our top pick in the Indian energy space. We estimate RIL to report EPS CAGR of 32% during FY08-11E and to generate operating cash flow of US$6.5bn in FY10E. RIL currently has net debt/equity of about 0.36x. Risks: Execution risk/production delay in D-6.

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>Reliance(HSBC)

Maintain Overweight rating while adding a (V) indicator;
cut target price from INR 2,945 to INR 2,160

Although on track vis-à-vis its own guidance, the schedule
for two key projects is short of our expectations

Cut our FY09e and FY10e EPS by 28.7% and 15%, respectively,
to account for dilution of equity base; it still translates into 82%
absolute growth in EPS over FY08-11e

Reiterate Overweight rating and add a (V) indicator, cut
target price to INR2,160 from INR2,945 due to the market
derating, softer margins and equity dilution

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