Accumulate on Reliance Industries : Prabhudas Lilladher

>> Tuesday, June 16, 2009

Prabhudas Lilladher has maintained its Accumulate rating on Reliance Industries even as the Bombay High Court gave its judgment in the favour of Reliance Natural Resources in the gas supply case.

“As per the hearing, RIL will supply 28mmscmd KG basin gas to RNRL for a period of 17 years. This is likely to have a negative impact on RIL’s NPV for KG basin, future cash flows and FY11 EPS of RIL.

We are envisaging three different scenarios and their effect on RIL estimates. One of the scenarios depicted includes, a scenario with similar case currently being contested by NTPC. However, there is a strong likelihood of RIL appealing in the Supreme Court as the current hearing will have negative implications on the ongoing case between RIL and NTPC.

We have incorporated the effect of RIL-RNRL case hearing in our estimates with reduction in NPV for KG Basin by Rs 75. We maintain ‘Accumulate’ on the stock," the brokerage said.

Source : Economic Times