Reliance Industries - Reiterate Our Faith In The Businesses: Motilal Oswal
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Motilal Oswal Report
Although oil prices have risen 24% to ~$61/barrel of oil in CY21 year-to-date, refining margins are yet to show any recovery due to the continued lack of demand on account of Covid-19.
However, petrochemicals demand has been strong, resulting in high margins across most products.
Polyethylene/Polypropylene/ Polyvinyl Chloride margins are at a strong $737/785/779/million tonne in CY21 year-to-date compared with the last 10-year average of $627/601/300/million tonne.
In the last six months, Reliance Industries Ltd. has underperformed Nifty by ~35%, largely due to poor refining margins, uncertainty in retail, and slowing growth in the telecom business.
However, the ongoing oil-to-chemicals restructuring may open up strategic partnership opportunities similar to those seen in other businesses.
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