BUY IGL 300 TGT 320, M&M 750 TGT 850
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Buy Reliance Industries For target of Rs. 1,375


RIL’s standalone PAT at Rs 73bn was above our and Street expectation of Rs 69 bn, driven by strong cyclical business performance. Refining business profitability was supported by lower opex (USD 2.2 /bl vs. USD 2.9 /bl in Q3FY16), while strong polymer margins aided petchem EBIT. Capex overrun, project delays an overhang: Petchem, refining expansion capex has been increased to USD 18.5 bn vs. USD 17-17.5 bn earlier. Moreover, telecom businesscapex is expected at Rs 1,500 bn by FY17 end vs. Rs 1,350 bn earlier. Also, petcoke gasification and PX expansion projects have been delayed by 3-6 months. We cut FY17/18E EPS by 13/7% to factor in the above. Our SOTP-based fair value reduces marginallyto Rs 1,375. Maintain BUY (32% upside).