RIL up 4% on 1:1 bonus issue; Nifty ends above 9,900, but flat for the week

Benchmark indices ended higher after Reliance Industries rallied nearly 4% on the BSE. Earlier in the day, RIL chairman Mukesh Ambani, announced a 1:1 bonus issue at the company’s 40th annual general meeting (AGM) in Mumbai. A day earlier, the company reported its highest quarterly consolidated net profit of Rs 9,108 crore in three-months to 30 June on the back of higher petrochemical margins and one-time gain from sale of African asset. Net profit in the April-June quarter at Rs 9,108 crore (Rs 30.8 per share) was 28% higher than Rs 7,113 crore (Rs 24.1 a share) in the same period of the last financial year, RIL said in a statement.

In other global markets, the euro’s surge to an almost two-year high dominated financial markets on Friday, with most major stock exchanges consolidating after a second strong week of gains while those in mainland Europe dipped.

Investors seem largely to have got over a period of jitters spurred by concerns over the pace of US economic growth and signs that several of the world’s major central banks were determined to tighten monetary policy soon.

04:04 PM
Vinod Nair, Head of Research, Geojit Financial Services

Market was enthused by Jio’s rapid expansion and innovative plan. The market capitalisation of RIL increased by Rs 19,000 crore today, whereas rivals failed to find their bandwidth. Additionally, continued buying interest in IT and private banks lifted the market from the volatile zone to settle in positive terrain.
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Sectoral performance

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Weekly Sensex gainers and losers

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Top Sensex gainers and losers

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RIL ended at Rs 1,586, up 3.76%. The stock hit in intraday high of Rs 1,592, up 4% on the BSE.

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The market breadth, indicating the overall health of the market, remained negative. On BSE, 1,423 shares declined and 1,256 shares rose. A total of 139 shares were unchanged.
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In the broader market, BSE Midcap and the BSE Smallcap indices ended little changed. For the week, BSE Midcap settled flat, while BSE Smallcap added 0.5%.
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The Sensex settled at 32,028, up 124 points, while the broader Nifty50 ended at 9,915, up 41 points. For the week, both indices closed flat.
03:26 PM
Oil update

Oil prices edged higher on a weaker dollar and diplomatic tensions in the Gulf, but Brent held below the $50 per barrel level that was breached for the first time in six weeks on Thursday. Benchmark Brent crude futures were up 24 cents at $49.54 a barrel, while US West Texas Intermediate (WTI) crude futures traded at 47.09 a barrel, up 17 cents.
03:21 PM
Nifty IT (up 2%) continues to lead among sectoral indices. Wipro, HCL Tech, TCS and Infosys gain the most, up between 2% and 6%.
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Sterlite Technologies WAS UP 8% AFTER hitting a new high of Rs 248, up 20% on the National Stock Exchange (NSE), extending its two-session long rally of over 30% after the company said it reported its highest ever quarterly revenues driven by strong order book and export sales in June quarter (Q1FY18). CLICK HERE FOR FULL REPORT
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At 3:10 pm, volatility index VIX was down nearly 2% to 11 mark.
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Top Sensex gainers and losers

gainers gainers
02:49 PM
Markets recover after RIL (up 4%) extends gains; Sensex up over 100 points, Nifty back above 9,900
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At 2:30 pm, the Sensex was trading at 31,940, up 36 points, while The Nifty50 was ruling at 9,880, up 7 points.
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GVK Power & Infrastructure, Jaiprakash Associates, Welspun Corp and HEG hit their respective 52-week highs, trading higher by up to 20% on BSE in an otherwise subdued market. CLICK HERE FOR FULL REPORT
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European markets open mixed

FTSE 100 added 0.2%, while CAC 40 and Euro STOXX 50 were trading flat with positive bias.
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Earnings impact

Ashok Leyland slipped over 5% to hit its lowest in four months after the truck maker missed Street expectations on earnings front as profit came in at Rs 111.2 crore for the June quarter against Rs 290.78 crore reported in the corresponding quarter of the last year. Revenue during the quarter fell moderately by 0.4% to Rs 4,514.4 crore from Rs 4,531.3 crore in same quarter last year.


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The market breadth, indicating the overall health of the market, turned negative in the noon trade. On BSE, 1,481 shares declined and 1,041 shares rose. A total of 132 shares were unchanged.
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Cable stocks fell after Jio announces Jio phone TV-cable, which is priced at Rs 309/month. Dish TV tumbled over 6%, Hathway Cable & Datacom slipped 3%, Sun TV Netwrok shed 3.8% and Siti Network fell 1.3%.

Photo: Shutterstock
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All sectoral indices except Nifty IT were trading in red


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Top gainers and losers on BSE Sensex


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RIL announces 1:1 bonus issue in its 40th AGM; launches Jio Phone. The last time RIL gave a bonus was in 2009. READ ABOUT IT HERE
12:36 PM
Shares of telecom services provider Idea Cellular (down 7% to Rs 88.40) and Bharti Airtel (down 4% at Rs 404) have dipped up to 6% on BSE in intra-day trade after Reliance Jio, a telecom subsidiary of Reliance Industries (RIL), launched a feature phone. Click here for full report

Reliance JioPhone Reliance JioPhone
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Dish TV fell over 5% after Jio announces Jio phone cable TV, which is priced at Rs 309/month for the big screen.
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We largely maintain our FY2018E EPS estimates, as higher GRM and petrochemical EBIT margin assumption is largely offset by losses in telecom business. We have increased our FY2019E EPS to Rs.125.9 to factor in higher GRM estimates of $12/bbl. We maintain our Buy rating on RIL. Any positive surprise in terms of better-than-expected financials of the telecom business would be an important re-rating trigger for RIL going forward
12:16 PM

RIL reported strong results, though they were largely in line with our expectations. It reported record stand-alone EBITDA and PAT despite nearly 4% q-o-q currency appreciation. Including R-Jio, we expect RIL’s consolidated EBITDA/PAT to record 19%/15% CAGR over FY16-20F (vs a mere 1%/3% CAGR in FY11-16).

Importantly, as past capex delivers and current capex pipeline is lighter, RIL will soon start generating high free cash flows, and could surprise with higher dividends and/or buy-backs.
12:14 PM

Reliance Industries (RIL) delivered robust operational performance in Q1FY18 driven by robust petchem margin and surprisingly strong GRM. The stock is inexpensive at 1.2x FY19E P/BV. We reiterate ‘BUY/SO’ with price target of Rs 1,782
12:04 PM
At 12:00 noon, RIL was trading 2% higher at Rs 1,562. It hit an intraday high of Rs 1,587 on the BSE
12:02 PM
Mukesh Ambani: The main aim is for feature phone users to migrate to Jio Phone

RIL up 4% on 1:1 bonus issue; Nifty ends above 9,900, but flat for the week

At Reliance AGM, Jio financials, 4G feature phone would be the focus

In September last year, Reliance Industries (RIL) Chairman Mukesh Ambani shared the roll-out plan for Reliance Jio’s telecom services at the company’s annual general meeting (AGM). This Friday, shareholders and investors will look for details on revenue generation from these services.

RIL is slated to announce its earnings for the April-June quarter (Q1) on Thursday and hold its AGM the day after. Analysts expect the focus, both in terms of the June quarter numbers and the AGM, would be on the company’s telecom business.

The details are important and will reflect on investor sentiment, which is on the rise. On Friday, the RIL stock scaled to a nine-year high.

While Jio started offering its services in September last year, these services have largely been provided free till March and continue to be offered at discounted prices. Among other details, analysts and shareholders would look for data on revenue generation and the profitability timeline for this business. “Telecom would be the topmost thing to watch, as details on other business like the oil and gas segment have been already spelled out,” said an analyst with a domestic brokerage firm.

Graph Last week, the company extended its promo offers for Jio services, adding to scepticism on any meaningful revenue addition in the current financial year. “We see downside risk to our Jio financial year 2017-18 revenue estimate of $2.7 billion, due to extension of the promotional offers. We are unsure if our FY18 revenue estimate for Jio holds any weight, given that Jio has been capitalising its revenue/expenses thus far,” a Morgan Stanley report dated July 11, said.

In addition to financial details, analysts and investors will look out for official comments on plans for low-cost 4G phones. “While every AGM has the usual expectations on bonus issue (the previous bonus issue was in FY 2009-10), expectations this time are high on another large announcement in telecom, especially 4G feature phones,” analysts with JPMorgan wrote in a report dated July 12.

Others will also look for any announcements related to the company’s expected entry into the “co-fibre-to-home” segment.

Besides Jio, analysts add, the Street will watch for details on plans in both the organised retail and fuel retail segments. “With the BP-RIL investment announcement made recently, one will expect more details on how the fuel retail business pans out, and also, what next for the organised retail business,” said the analyst quoted earlier.

Analysts, on an average, estimate RIL’s consolidated net profit at Rs 7,853 crore for the June quarter.

garph For its refining business, the company is expected to continue seeing gross refining margins (GRMs) in double digits. “Though we expect GRMs to be weaker on a sequential basis,” said the analyst quoted earlier.

RIL has, so far, not accounted for its telecom business in its consolidated financial performance, and is unlikely to do so for Q1. “RIL had guided forecast to Jio capital and operating expenditure of Rs 18,000 crore in the June quarter and was silent on P&L (profit and loss) recognition from the September quarter. Given that the tariff plan discounts have been extended for another three months, we would be surprised to see if P&L recognition takes place from the September quarter, and hence, operating expenditure and interest should continue to get capitalised,” the JPMorgan report said.

At Reliance AGM, Jio financials, 4G feature phone would be the focus

Reliance makes its 15th global oil block exit with pullout from Peru

Reliance Industries has pulled out of the last oil block it held in Peru, trimming its overseas assets to just two properties in Myanmar.

The billionaire Mukesh Ambani-led firm had in 2007 set up Reliance Exploration and Production (REP) DMCC primarily for acquiring overseas assets.

It had steadily acquired 17 conventional oil and gas assets, including four in Peru, three in Yemen (one producing and two exploratory), two each in Oman, Kurdistan and Colombia and one each in East Timor and Australia. It last bagged two oil and gas exploration blocks in Myanmar in 2014.


But the company slowly exited most of its international assets.

In its latest annual report for 2016-17, RIL says it has “withdrawn from Block 39” in Peru. RIL held 10 per cent interest in the block. Anglo-French oil and gas company Perenco held 55 per cent stake in the block while PetroVietnam of Vietnam held the remaining 35 per cent.

RIL said it is awaiting formal assignment of its interest to the existing partners.

inRead invented by Teads
The company now is left with just two exploration blocks in Myanmar — M17 and M18. RIL holds 96 per cent stake in each of the two blocks with the remaining 4 per cent being with a local company.

For Block M17, the company has sought an “extension for study period” from Myanma Oil and Gas Enterprise or MOGE, the annual report said.

RIL’s domestic oil and gas business portfolio, which at one point of time comprised of 42 blocks or fields, has shrunk to five conventional oil and gas assets and two coal-bed methane (CBM) blocks.

As part of its upstream (hydrocarbons exploration and production) portfolio rationalisation, the company has been exiting those assets which it feels are not going to give good return on investment.

According to the annual report, the company’s present domestic portfolio comprises the flagging KG-D6 block in the Krishna Godavari basin, Mahanadi basin block of NEC-25, CB-10 in Cambay and GS-01 in Saurashtra basin.

Besides, it also has a stake in Panna/Mukta and Tapti oil and gas fields in the Arabian Sea. However, Mid and South Tapti fields have been abandoned after production tapered, it said.

Also, it has two CBM blocks in Madhya Pradesh.

RIL had in February 2011 announced a “transformational” deal when UK’s BP picked up 30 per cent stake in its 23 oil and gas blocks for $7.2 billion. However, in August that year, the government allowed them to form a partnership in only 21 blocks.

Since 2012, RIL and BP have been pruning their portfolio, shedding not so viable acreage. They are now left with just three blocks — the producing KG-DWN-98/3 or KG-D6 block in Bay of Bengal, gas discovery areas of NEC-OSN-97/2 (NEC-25) and CB-ONN-2003/1 in Cambay basin.

In the US, it also has a stake in three shale gas producing properties.

Reliance makes its 15th global oil block exit with pullout from Peru

Reliance, BP to invest Rs 40,000 crore in KG block over 3 to 5 years

Reliance Industries (RIL) on Thursday announced it would invest Rs 40,000 crore ($6 billion) in three projects, over three to five years, for developing discoveries in the KG-D6 block along with its 30 per cent partner BP Plc.

These discoveries are in deepwater gas fields and are expected to bring onstream 30-35 million cubic metres (1 billion cubic feet) of gas a day over 2020-22. The investment announcement comes even as the two companies are involved in arbitration with the government over pricing of natural gas.

The first project will be for R-series (D34), which will produce 12 mmscmd gas. The implementation of two other projects in Block KGD6 was subject to applicable regulatory and government approvals, the company said. RIL and BP plan to submit development plans for the next two projects for government approval before the end of 2017.


“We still have pending arbitration with the government. We will follow the normal course of the law,” Mukesh Ambani, chairman and managing director, RIL, told reporters here. “We are sure that we will get a fair outcome and we don’t think it will come in the way of our investment,” he added.

The two partners will award contracts for development of the ‘R-Series’ fields soon. Since the formation of the partnership in 2011, the two companies have invested over Rs 10,000 crore ($1.6 billion) in deepwater exploration and production in the period to May 2017. Gas production from the integrated development is expected to reduce India’s import dependence by over 10 per cent in 2022.

RIL and BP will also expand their existing partnership for strategic cooperation in new opportunities across India’s energy sector.

The two companies will jointly explore options to develop differentiated fuels, mobility and advanced low-carbon energy businesses in India.

Ambani said demand for fuel was expected to grow by 5-7 per cent every year over the next decade. In addition to conventional transportation and aviation fuel retailing, the companies expect to collaborate on unconventional mobility solutions, addressing electrification, digitisation and disruptive mobility trends. Together, these collaborations will seek to address the mobility needs of urban, rural/farm, industrial/commercial, and highway consumers in India, applying the leading capabilities of both partners.

Ambani said, “This strategic partnership not only strengthens the relationship between two global energy leaders, but is also in line with and supports the forward-looking policies and vision of the government.” He said the two companies would also look at working together on carbon emissions trading and share knowledge around technology and management practices utilising their unique infrastructure systems. Bob Dudley, BP group chief executive, said, “India’s demand for both energy and mobility is growing and evolving rapidly. This presents many opportunities for BP and Reliance to build on our existing strong relationship in upstream and expand our partnership further downstream.”

On the stagnating production from KG-D6, Dudley said, “The change in policy will allow us to develop new resources just in time.” BP has government permission to put up 3,500 petroleum retail outlets for which Dudley said the company would look at collaboration with RIL.

Oil & Gas partnership
In February 2011, London-based BP bought a 30% stake in 21 oil and gas production-sharing contracts operated by RIL for $7.2 billion
In 2013, BP and RIL announced two significant gas and condensate discoveries
In Krishna Godavari (KG) basin gas block, RIL owns a 60% stake and BP 30%, while Niko Resources holds the remaining
The producing fields in KG basin are D1, D3 & D26
Three new projects, with total investment of Rs 40,000 crore, expected to bring a total 30-35 million cubic metres gas a day
New gas production to go onstream in phases over 2020-2022
RIL, BP to focus on mobility solutions, look at both conventional and non-conventional fuels
BP, which got approval from the government to set up 3,500 fuel retail outlets in India, will have marketing and downstream tie-up with RIL

Reliance, BP to invest Rs 40,000 crore in KG block over 3 to 5 years