Thursday, February 23, 2012

>RIL & Singapore GRM down sharply WoW

■ RIL GRM down US$1.3-1.7/bbl WoW; Sing down US$1.3/bbl
RIL’s theoretical GRM for the week ended February 17 at US$6.1-7.2/bbl is down US$0.4/bbl WoW assuming its refinery operates as usual. However, shut down of one CDU at its more complex new refinery would mean an additional hit of US$1.0-1.3/bbl and GRM of US$4.83-6.19/bbl last week. Singapore GRM at US$8.52/bbl last week is also down US$1.3/bbl WoW. The decline in GRM last week is due to a fall in diesel, jet fuel and fuel oil cracks. RIL’s GRM to date in 4Q at US$6.09-7.19/bbl is US$2.0-3.1/bbl below Singapore GRM of US$9.23/bbl.

■ Shutdown at new refinery to hit RIL GRM by US$1-1.3/bbl
Half of RIL’s new refinery was shut for planned maintenance on February 10. It is to restart in the first week of March. The new refinery has a superior product slate (more petrol instead of naphtha) than the old refinery. This will therefore shave off US$1.0-1.3/bbl of RIL’s GRM last week and US$0.14-0.19/bbl of its 4QTD GRM.

■ Diesel and jet fuel down WoW but still healthy
RIL’s GRM last week was hit by US$1.5-2.2/bbl WoW fall in jet fuel and diesel cracks (46% of its product slate). Jet fuel and diesel cracks are still healthy at US$15.7-16.7/bbl. Singapore GRM was also hit by US$2.8/bbl WoW fall in fuel oil (RIL does not produce) cracks. LPG and naphtha cracks were up US$0.1-0.9/bbl.

■ RIL’s 4QTD GRM below Singapore GRM & down YoY
RIL’s theoretical GRM in 4QTD at US$6.09-7.19/bbl is US$2.0-3.1/bbl below Reuters’ Singapore GRM of US$9.23/bbl. In 4QTD RIL’s gain from QoQ product cracks rise is US$2.4/bbl vis-à-vis US$2.5/bbl for Reuters’ Singapore GRM. RIL is also hit by lower discount to Dubai of crude it uses (down US$0.1-0.7/bbl QoQ). Its 4QTD GRM is also down US$2.0-3.1/bbl YoY (US$9.2/bbl in 4Q FY11).

■ RIL’s 4Q profit down 13-23% YoY at 4QTD GRM
RIL’s 4Q profit works out to Rs41.5-46.6bn at 4QTD theoretical GRM of US$6.1- 7.2/bbl and blended petrochemical margin of US$429/t (down 21% YoY in rupee terms). It would mean 13-23% YoY fall in 4Q profit (4Q FY11: Rs53.8bn).

■ Downside to RIL’s FY13 EPS 6-15% if GRM at 4QTD level
If RIL’s FY13 GRM is at 4QTD level of US$6.3-7.3/bbl, its FY13 earnings would be 6-15% below our EPS estimate of Rs66.4 (assumes GRM of US$8/bbl).

■ R&M companies GRM down WoW but up QoQ
HPCL and BPCL’s theoretical GRM last week was down WoW at US$3.6/bbl. However, their GRM in 4QTD at US$5.2-5.5/bbl is up QoQ.

To read full report: RIL