RIL in Macquarie’s top Asia petchems picks

13 June 2007 13:25  [Source: ICIS news]

MUMBAI (ICIS news)--India's Reliance Industries is among Macquarie Bank’s top picks of Asian petrochemical makers due to its focus on massive capacity expansions that is undermining growth and the huge potential of the company’s upstream business.

“With planned capital expenditure of $20bn (€15bn), a proposed doubling in refining capacity and large oil/gas finds could triple Reliance Industries Limited’s (RIL) profits over the next five years,” Macquarie said in a research report dated 11 June, which was obtained on Wednesday.

RIL is poised to nearly double its cracker capacity which will use cheap waste gases, challenging firms in the Middle East as the lowest cost producer, it said.

“Integrated producers in refining and intermediates such as Reliance are best positioned to face risks, which outweigh rewards for commodity plastics utilisation rates globally,” it added.

Macquarie also said that RIL stood to gain from an expected rebound in polyester margins, which have hit record lows. Polyester margins contribute two-fifths of RIL’s petrochemicals sales.

Macquarie has also raised Reliance’s target price by 2% to Indian rupees (Rs)1,815 primarily to account for the recent rises in the markets prices of investments and treasury stocks.

Reliance shares closed at Rs1,673.50 down nearly 2% on the Bombay Stock Exchange.

($1=€0.75)

($1= Rs40.48 / €1=Rs53.87)

By: Divya Chowdhury
+65 6780 4359

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