According to CLSA, there is clarity on gas price premium for deepwater discoveries and start of the key projects in its ongoing US$14bn downstream expansion are allslated in 2015. These projects should drive a near doubling in Ebitda and makes Reliance the strongest two-year earnings growth story in global large cap oil space.
This will also allow investors to focus on the key downstream projects which will drive >90% increase in Ebitda in next three years after three years of decline. Historically, Reliance’s strong stock performance has coincided with years when large projects have started. The next 12-18 months may be another such period for the stock
Any stock price weakness on the back of weak 3Q result due to one-off inventory losses should be used as an entry opportunity.Reiterate our double bagger BUY with target of Rs1250/share.
