gasoline - most

8/12/2019 Gasoline - MoST

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June 2014

Valuation: Coverage universe

0

4

8

12

May-1 1 May-1 2 May-1 3 May-1 4

Reuters Singapore GRM (USD/bbl)

1-M Relative Stock Performance (%)Diesel loss at INR2.8/ltr post recent hike

4

(1)

(8)

(6)

6

4

29

7

16

11

8

(7)

6

IGL

PLNG

GSPL

GAIL

CPCL

MRPL

IOC

BPCL

HPCL

OINL

ONGC

CAIRN

RIL

I n t g / U p s t r e a m

O M C ' s

G a s

/ C G D

R e f i n e r s

May2014

Harshad Borawake ([email protected]); +91 22 3982 5432

Nitish Rathi ([email protected]); +91 22 3982 5558

Special Reports: (a) Meetings Takeaways: ONGC, GAIL (b) Diesel

de-regulation in <6months: Update; (b) 4QFY14 results: ONGC,

OINL, GAIL, OMC’s (HPCL, BPCL and IOCL).

SummaryBrent crosses USD111/bbl, WTI flat MoM as US production highest since

May 1988

q While the Brent has been ranging within USD107-112/bbl for the last

11 months it crossed USD111/bbl since Dec-13 led by geopolitical

issues. Brent was up 2% MoM to average USD109.7/bbl in May-14.

q WTI remained flat MoM to USD102/bbl as US achieves highest oil

production of 8.4mmbbl/d in May-14, since 1988.

Diesel de-regulation in <6 mths; OMC’s take hike under new govt.

q Under the new government, OMCs announced their first monthly

diesel price hike of INR0.5/ltr. Post this hike, diesel loss of INR2.8/ltrimplying diesel de-regulation in coming six months, however do not

rule out deregulation by few months due to volatile oil prices.

End of refinery turnarounds impact GRM’s; Down 8% MoM at USD6/bbl

q GRM’s wich were boosted by bunching of maintenance shutdowns

have now declined with capacities coming back on stream. May-14

GRM averaged USD6/bbl, led by decrease in gasoil and gasoline

cracks (gasoil down -5%; gasoline down -12% MoM). Recent weeks

GRMs have further declined to sub-USD5/bbl levels.

Spreads of PP, PE remain 5-yr high, PVC expands; polyesters flat MoMq PP & PE spreads continue to stay at a higher-end of their 5yr- range

since >9 months. (PE down -3.5%; PP flat; PVC up 6% MoM).

q Polyester spreads remain flattish MoM after declining for 6 months.

Valuation and view

q Prefer ONGC/OINL in upstream and BPCL in OMC‘s (strong balance

sheet and E&P potential) due to (a) new gas pricing in FY15 and (b)

likely diesel deregulation in <6 months.

Reco M Cap P/E (x) P/B (x) EV/EBITDA (x)USD b FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E

Integrated/UpstreamRIL* Neutral 57.2 14.1 12.6 12.1 1.6 1.4 1.3 11.3 10.5 10.0 ONGC Buy 60.9 13.8 12.3 10.6 2.2 1.9 1.7 6.2 5.6 4.7 CAIRN Neutral 11.7 5.7 6.9 7.3 1.2 1.1 1.0 4.2 4.2 4.0 OINL Buy 5.8 11.7 10.5 8.6 1.7 1.6 1.4 9.3 7.3 5.5 OMCs

IOC Buy 13.7 11.6 11.4 9.6 1.2 1.1 1.1 10.4 7.7 6.7 BPCL Buy 7.0 10.8 14.3 13.4 2.2 2.0 1.8 7.5 8.2 7.6 HPCL Buy 2.3 7.9 14.4 11.7 0.9 0.9 0.8 9.3 9.6 7.9 Independent RefinersMRPL Neutral 1.9 NA 10.9 8.3 1.6 1.4 1.3 9.9 6.3 5.1 CPCL Buy 0.2 NA NA 3.6 0.7 0.6 0.6 NA 5.7 5.5 Gas CompaniesGAIL** Neutral 9.1 13.5 13.8 13.5 2.0 1.8 1.7 5.2 4.8 4.8 GSPL Neutral 0.7 10.4 9.4 8.5 1.3 1.2 1.1 5.8 5.5 5.1 PLNG Buy 2.0 17.0 15.7 12.6 2.4 2.2 1.9 9.9 8.5 6.9 CGD CompaniesIGL Neutral 0.8 13.0 12.1 10.8 2.7 2.3 2.0 6.2 5.5 4.6

*No. of shares adj. for treas ury shares; **P/E adj. for investments

11.3

3.7

14.5

2.80

5

10

15

Jan-13 May-13 Sep-13 Jan-14 May-14



GAIL India FY14 Analyst Meet Takeaways

3

We hosted GAIL’s FY14 Analyst Meet. Key takeaways:

q GAIL to source 8-10mmt of LNG from international market

annually in long-term: 6mmt from USA (linked to Henry Hub

price), and 2.5mmt from oil major Gazprom, Russia.

q GAIL plans to sell 1mmt of the LNG sourced from USA in the

international markets through its Singapore trading arm.

q GAIL expects to have in place 4mmt annual LNG contract

with Power and Fertilizer companies by 2QFY15.

q GAIL increases its emphasis on gas retailing (in comparison

to Power and Fertilizer sectors), as CGD now accounts for

11% (v/s 2% before) of the transmission revenues, and plans

to add 25 more cities/towns in its network.

Projects update:

q GAIL expects approval of setting up liquefaction capacity of

2.3mmtpa along with Dominion Cove point LNG in USA by

August 2014. The supply from the terminal is expected to

start from FY18.

q Gas supply has been started in the Phase-I of Kochi-

Kottanand- Bangaluru/Mangalore pipeline. GAIL facespipeline pass-through disputes with farmers. The matter is

under court review.

q No significant progress has been made in the other pipeline

projects: TAPI, Jagdishpur-Haldia, and Surat-Paradip pipeline

projects.

SPECIAL REPORT

q Brahmaputra Cracker (280KTA) has achieved 98% project

progress. Pre-commissioning and production is expected in

2QFY15, and commercial production to begin in 3Q/4QFY15.

q 13 cargos have been operated in the LNG terminal

commissioned at Dhabol. 15 cargos have been contracted tobe operated in FY15. The terminal can’t be operated at the

same capacity round the year, as cooling-off is expected in

monsoon.

q GAIL to set-up PBR (INR25b) and Phenol-acetone (INR27b)

production facilities at Dahej, Gujarat. Its PBR facility shall

utilize butane from OPAL’s petchem facilities at Dahej.

Operational highlights:q In 4QFY14, GAIL consumed 6mmscmd of gas, out of which

1mmscmd was consumed in fuel, 2.5mmscmd in LPG and

2.5mmscmd Petchem.

q Even with its ship-or-pay (SOP) contract with Power sector

companies, 50% of the amount is not available to GAIL, due

to non availability of gas from KG-D6.

q GAIL booked INR42b as receivables due to SOP charges, out

of which INR20b are yet provisional.

q GAIL expects subsidy sharing for FY15 to come down to

INR9b from INR19b in FY14.

June 2014



ONGC FY14 Analyst Meet Highlights

4

We attended ONGC’s FY14 Analyst Meet. Key takeaways:

q FY14 Domestic oil and gas production (including share in JV)

stood at 50.85mmtoe (Oil: 25.99mmt, Gas: 24.85bcm) v/s

51.46mmtoe in FY13 (Oil: 26.13mmt, Gas: 25.34bcm).

q The management attributes the decline in production to the

old fields (On-shore: 40yr; off-shore: 30-40yrs).

q ONGC expects production to increase from by 1-1.5mmt in

FY15, led by EOR processes. The increase is expected from

1QFY15, as the production for May 2014 stood at 300kbbl

v/s 290kbbl in April 2014.

Operational Highlights

q Ultimate reserve accretion in domestic areas (operated by

ONGC) stood at 84.99mmtoe v/s 84.84mmtoe in FY13.

q RRR with 3P reserves stood at 1.87 in FY14 v/s 1.84 in FY13,

whereas RRR with 2P stood at 1.24 in FY14.

q Balance recoverable 1P reserves (including JVs and overseas)

stood at 962mmtoe by FY14. Total domestic 1P reserves

(including JVs) were 755mmtoe and that of overseas were

207mmtoe.q The FY14 margins on gas production stood at

USD0.41/mmbtu, at gas price of USD4.2/mmbtu, and ONGC

expects costs to increase further.

SPECIAL REPORT

Projects Update

q Production from Tapti gas field (PMT PSC) has been declining

faster than expected.

q Daman off-shore is expected to start production by FY18. Its

process platform and pipelines are operational, well

platforms remain to be commissioned.

q Eastern off-shore production is expected by FY19.

q ONGC finds KG-DWN-98/2 field to be more profitable than

Mahanadi as viable gas price for Mahanadi is higher than KG-

DWN-98/2.

q ONGC plans to invest INR360b in projects to be

commissioned by FY17.

Financial Highlights

q ONGC’s FY14 subsidy sharing with OMCs was INR564b v/s

INR494b in FY13. The impact on PAT due to subsidy sharing

was INR315b v/s INR284b in FY13, and the impact on

statutory levies was INR8.6b in FY14.

q Pursuant to the decision of the GOI to divest 10% of the

equity share capital of IOCL, ONGC acquired 5% equity

shares of IOC at a price of INR220/sh amounting to INR26.7b.

June 2014



Diesel de-regulation likely in <6 mths

Oil PSU’s poised for structural re-rating; prefer ONGC/OINL/BPCL

5

Event: OMCs announced their first ever monthly diesel price hike of INR0.5/ltr under the new

government. Post this price hike diesel under recovery stands at INR2.8/ltr implying diesel de-

regulation in next five months. OMCs have increased the diesel price by INR10.2/ltr (21%) since Jan-13

and diesel price in Delhi now stands at INR57.3/ltr, while Petrol price stands at INR71.4/ltr.Our view

q In-line with our expectation, new government allowed the monthly diesel price hikes to continue,

thereby confirming their support for sector reforms.

q For OMCs, in the initial period of reforms, earnings growth would be from reduction in interest cost,

which could be followed by likely large delta in diesel marketing margins, post deregulation.

q Further, impending gas price hike from USD4.2/mmbtu to ~USD8/mmbtu is positive for gas producers

like ONGC, OIL and RIL.

SPECIAL REPORT

Click here to access detailed report

Post this price hike, Diesel under-recovery at INR2.8/ltr, Diesel price hiked by INR10.1/ltr (21%) since Jan-13 (INR/ltr)

June 2014

http://institution.motilaloswal.com/emailer/Research/OIL-20140428-MOSL-SU-PG008.pdf

http://institution.motilaloswal.com/emailer/Research/OIL-20140428-MOSL-SU-PG008.pdf



Sector Update: Under recovery at ~INR980b v/s INR1.4t in FY14,

Expect to fall ~50% by FY16E

6

Price differential between petrol and diesel at INR14.1/ltr v/s peak

of INR32/ltr in May-12 MTM under recoveries stand at INR980b; 30% lower than INR1.4t in

FY14 d)

ONGC’s cons. EPS could increase 64% if govt. maintains upstream

sharing similar to FY14 (in % terms) and gas prices are hiked 100% Despite 50% price passthrough assumption, ONGC/OINL benefit

most from gas price hike

June 2014



ONGC 4QFY14: In-line EBITDA despite lower production, led by

low opex; gas price hike to boost earnings; Buy

7

q ONGC’s reported largely in-line EBITDA at INR111b (+8% YoY, -9%

QoQ) despite higher subsidy at INR162b (est INR141b) due to (a)

lower opex at INR33b (est INR43b; -30% YoY) and (b) higher oil and

gas revenues by INR8b and (c) lower staff cost at INR4.5b (est.

INR6b, -38% YoY). Difference at PAT level increased due to higherD,D&A at INR59.7b (est. INR51b) partly compensated by higher

other income at INR18b (est INR15.6b).

q Full year standalone (SA) PAT stands at INR221b and EPS at INR25.8

(+5% YoY) and adj. consolidated PAT at INR264b and EPS at INR30.8

(+9% YoY). Higher consolidated EPS growth is led by OVL and MRPL

returning back to black.

q 4QFY14 net realization at USD32.8/bbl: 4QFY14 gross realization

stood at USD107/bbl (-6% YoY and -1% QoQ) and post the subsidy

stood of USD73.9/bbl net realization stood at USD32.8/bbl (-36%YoY, -29% QoQ).

q Maintain Buy: We remain positive on ONGC due to (1) likely

increase in net realization due to lower subsidy driven by

continued diesel price hikes, (2) significant beneficiary of

scheduled gas price hike in FY15, (3) attractive valuations.

q Upside potential to our FY15 gas price assumption: We model gas

price of USD6.3/mmbtu from FY15 v/s likely new gas price of

USD8.4/mmbtu, to factor in likely subsidy towards power/fertilizer

sector. However, if the full gas price benefit is passed to Oil India

then FY15E EPS will further increase by 16%.

q Implied dividend yield at ~3% on FY15E. The stock trades at 9.3x

FY16 EPS of INR40.2. Our SOTP-based target price for ONGC stands

at INR435/sh. Buy.

q Expect under recoveries to halve

by FY16 v/s FY14: We expect

gross under recoveries to reduce

by ~48% by FY16 to INR729b. We

expect government to first take

benefit of lower subsidy and

hence model upstream subsidyreduction of only 27% by FY16.

June 2014



OINL 4QFY14: Below estimates led by lower production, higher

subsidy; Gas price hike, likely lower subsidy key positives; Buy

8

q Significantly below estimates: Oil India reported EBITDA at INR3.5b

and PAT at INR5.7b (est. INR8.7b; -26% YoY, -37% QoQ). Reported

numbers were below estimate led by (a) lower oil and gas

production at 1.4mmtoe (-10% QoQ) impacted by external

disruptions, (b) higher than expected subsidy at INR23.5b (estINR20.7b), (c) higher other expenditure at INR4.7b (est INR2.6b);

which was partly compensated by (d) higher other income at

INR7.2b (+56% YoY, +63% YoY) due to forex gain of INR2.4b.

q 4QFY14 net realization at USD37.4/bbl: Gross realization stood at

USD106.6/bbl (-4% YoY, -1% QoQ) and subsidy at USD69.2/bbl (+24%

YoY and QoQ) resulting in net realization of USD37.4/bbl (v/s

55.4/bbl in 4QFY13 and 52.1 in 3QFY14).

q Production impacted by disruptions: OINL’s 4QFY14 production wasimpacted by bandh (strikes) and blockades for recruitment issues.

4QFY14 oil production stood at 0.79mmt (-10% YoY, -12% QoQ) and

of lower under recoveries in FY15) and INR488b in FY16 v/s

INR670b in FY14.

Valuation and View

q Upside potential to our FY15 gas price assumption: We model

gas price of USD6.3/mmbtu from FY15 v/s likely gas price of

USD8.4/mmbtu, to factor in likely subsidy towards

power/fertilizer sector. However, if the full gas price benefit is

passed on then FY15E EPS will increase by ~16%.

q The stock trades at 8.5x FY16E EPS of INR68 and has an implied

dividend yield of 4-5%. We value OINL at INR679/share based on

average of three methodologies: (1) P/E of 10x FY16E, (2) 4.5x

FY16E EV/EBITDA and (3) DCF (WACC of 12%). Maintain Buy.

gas production stood at

0.62bcm (-4% YoY, -8% QoQ).

q USD56/bbl subsidy formula

breached: 9MFY14 subsidy

was based on USD56/bbl,

however with 4QFY14 subsidy

of USD69/bbl, formula seemsno more valid.

q With overall under recoveries

are set to decline 48% by

FY16 to INR729b v/s INR1.4t

in FY14, we model upstream

subsidy at INR645b in FY15

(expect govt. to take benefit

June 2014



GAIL 4QFY14: Below estimates led by several one-offs;

Headwinds for gas production continues; Neutral

9

q Below estimates led by subsidy and several one-offs: GAIL’s

4QFY14 EBITDA was at INR13.4b (+18% YoY, -40% QoQ) and PAT at

INR9.7b (+57% YoY, -27% QoQ). Below estimate numbers were led

by (a) reversal of INR1.6b take-or-pay in gas transmission and

INR1b provision for Kochi-Bangalore pipeline, (b) 22-day shutdownimpacting petchem opex and LPG & Liq. HC volume, (c) subsidy at

INR5b (est. nil), which was partly negated by INR1.6b gain in other

income.

Segmental analysis: Shutdowns, high LNG price and one-offs impacted

profitability.

q Reported gas transmission EBIT stood at INR2.6b (est. INR4.3b) led

by INR1.5b reversal of take-or-pay. Volumes stood at 94.7mmscmd (-

5% YoY, -1% QoQ).q Absence of trading gains led to gas trading EBIT at INR2.9b (est.

INR3.9b).

4Q subsidy - a surprise; year-end inventory on levels rise.

q Against the nil subsidy expectation, Government asked GAIL to

share INR5b.

q Inventory on the balance sheet as on March 31, 2014 rose 47%

YoY to INR22.5b led by higher gas volumes due to bunched up

fertilizer shutdowns.

q Other income at INR5b (est. INR1b; +55% YoY, +93% QoQ) was

boosted by INR1.6b gain from a favorable decision in its case with

GSPC.

Valuation and view; clarity of subsidy sharing remains critical

q Key events to watch out: 1) impact of recently-announced

domestic gas price hike as and when implemented, 2) likelihood

of transmission volume increase and 3) clarity on subsidy sharing.

q We model FY15E and FY16E subsidy at INR14b and INR8.8b

respectively.

q The stock trades at 10.8x FY16E EPS of INR31.8. Our SOTP-based

fair value stands at INR384/sh. Maintain Neutral.

q Petchem realization at

INR110/kg and volume at 107kt

is largely in-line, but EBIT at

INR2.4b (est. INR3.9b) is

impacted by higher gas price

and shutdown.q LPG and liq. HC EBIT (before

subsidy) at INR10b (est.

INR10.8b) was impacted by

lower volumes on account of

22-day maintenance shutdown.

June 2014



HPCL 4QFY14: Above estimates led by forex and product

inventory gains; likely subsidy reduction to boost earnings; Buy

10

q Above estimates led by Forex and adventitious inventory gains:

HPCL reported 4QFY14 EBITDA at INR58.7b v/s our estimate of

INR47b led by (a)forex gain of INR4.7b (accounted in net

expenditure), (b) adventitious inventory gain of INR4.5b and (c)

higher refining profits led by higher GRM at USD4.7/bbl (estUSD4.4/bbl) and throughput. PAT at INR46b (est. INR35b) was

further boosted by (a) lower interest cost at INR2b (-30% YoY, -55%

QoQ) led by reclassification and (b) higher other income at INR4b

(+54% QoQ). Comparable PAT stood at INR77b in 4QFY13 and loss

of INR17.4b in 3QFY14.

q Full year FY14 EPS up 92% YoY: Full year standalone (SA) PAT stood

at INR17.3b and EPS at INR51.1 (+92% YoY) and consolidated PAT

stood at INR10.8b and Cons. EPS at INR31.9 (+116% YoY). Lower

consolidated PAT would have been driven by losses at Bhatindarefinery.

q Large YoY increase in SA PAT is driven by (a) higher refining margins,

(b) lower forex loss at INR2.2b (v/s INR6b in FY13), (c) lower interest

led by reclassification at INR15b (v/s INR18b in FY13) despite largely

For full year HPCL’s subsidy sharing stood at INR4.8b (~2% of

gross under recoveries).

q GRM at USD4.7/bbl in 4QFY14: 4QFY14 reported GRM stood at

USD4.7/bbl, up 26% YoY and 97% QoQ. Adventitious inventory

gains stood at INR4.5b v/s INR11.3b in 4QFY14 and INR8.3b in

3QFY14.

q Valuation and View: Ongoing reforms have the potential to

transform OMCs to a structural investment play in our view led by

higher earnings predictability, increase in profitability leading to

higher RoE’s.

q Likely diesel deregulation could cut under recoveries by ~48% in

FY16 over FY14. For OMC’s, earnings growth would be from

reduction in interest cost followed by likely large delta in diesel

marketing margins post deregulation. INR0.5/ltr increase in dieselmarketing margin increases HPCL’s EPS by 50%.

q The stock trades at 11.7x FY16E EPS of INR34.7 and 0.9x FY16E

BV. Maintain Buy.

flat gross debt. This was

partly negated by lower

other income and higher

depreciation.

q 4QFY14 over recovery atINR34b; FY14 subsidy

sharing at 2%: While

upstream companies

compensated HPCL INR57b

in 4QFY14, government

provided INR69b; leading to

a net over recovery of

INR34b for HPCL.

June 2014



BPCL 4QFY14: Above estimates led by GRM and Forex gain;

Diesel de-regulation, int. cost reduction to boost earnings; Buy

11

q Above estimates led by higher GRM and forex gain: BPCL reported

4QFY14 EBITDA at INR63b v/s our estimated of INR47b led by (a)

GRM at USD6.6/bbl (est. USD4.5/bbl) an (b) forex gain of INR4.5b;

partly negated by adventitious inventory loss of INR2b. Reported

PAT was further boosted by higher other income at INR4.6b (+61%QoQ) led by INR3.3b gain on RBI forex swap and lower interest cost

at INR2b (-33% QoQ) led by INR/USD appreciation. Comparable

PAT stood at INR48b in 4QFY13 and loss of INR10.9b in 3QFY14.

q 4QFY14 over recovery at INR36.5b; FY14 subsidy sharing at 2%:

While upstream companies compensated BPCL INR38b in 4QFY14,

government provided INR96b; leading to a net over recovery of

INR36.5b for BPCL. For full year BPCL’s subsidy sharing stood at

INR4.8b (~2% of gross under recoveries).

q Reported GRM of USD6.6/bbl at premium to Reuters SingaporeGRM: 4QFY14 reported GRM stood at USD6.6/bbl, up 11% YoY and

3.8x QoQ. Large QoQ jump driven by partial maintenance shutdown

Expect further upside to our current E&P value of INR179/sh

(Mozambique - INR166 and Brazil - INR12) led by Mozambique

and Brazil’s SEAL basin reserve announcement.


transform OMCs to a structural investment play in our view led byhigher earnings predictability, increase in profitability leading to

higher RoE’s.

Ø Likely diesel deregulation could cut under recoveries by ~48% in

FY16 over FY14. For OMC’s, earnings growth would be from


marketing margins post deregulation. INR0.5/ltr increase in diesel

marketing margin increases BPCL’s EPS by ~20%.

Ø The stock trades at 12.3x FY16E EPS of INR43.5 and 0.9x FY15E BV

(adjusted for investments). BPCL is our top pick among OMCs forits E&P potential. Buy.

at Kochi and Mumbai

refinery in 3QFY14. BPCL’s

FY14 end gross debt stood at

INR203b (v/s INR238b in

FY13).

q Mozambique reserve

upgrade in 4QFY14: BPCL’sMozambique block gas

reserve estimates have been

increased in 4QFY14 to 50 -

70+ tcf from 35 - 65+.

June 2014



IOC 4QFY14: Above estimates led by forex gains; diesel

deregulation & delta in marketing margin to boost earnings; Buy

12

q Above estimates led by forex gain: IOCL reported 4QFY14 EBITDA at

INR134b v/s our est. of INR115b led by (a) forex gain of INR18.6b

and lower (b) lower opex. This was partly negated by (a)

adventitious loss of INR9.7b and (b) lower GRM at USD2.2/bbl (est

USD4/bbl). Differential at PAT level was lower due to higher otherincome led by recovery of UP entry tax. IOC reported PAT at

INR94b v/s INR145b in 4QFY13 and loss of INR9.6b in 3QFY14.

q Full year FY14 EPS up 59% YoY: Full year standalone (SA) PAT stood

at INR70b and EPS at INR28.9 (40% YoY) and consolidated PAT stood

at INR71b and Cons. EPS at INR29.2 (59% YoY). Large YoY increase is

primarily driven by higher GRM at USD4.2/bbl v/s USD3.2/bbl in

FY13 and higher adventitious gains.

q 4QFY14 over recovery at INR77b; FY14 subsidy sharing at 2%: While

upstream companies compensated IOCL INR96b in 4QFY14,government provided INR185b; leading to a net over recovery of

INR77b for IOCL. For full year IOCL’s subsidy sharing stood at

INR10.8b (~2% of gross under recoveries).


transform OMCs to a structural investment play in our view led by

higher earnings predictability, increase in profitability leading to

higher RoE’s.

q Likely diesel deregulation could cut under recoveries by ~48% inFY16 over FY14. For OMC’s, earnings growth would be from


marketing margins post deregulation. INR0.5/ltr increase in diesel

marketing margin increases IOCL’s EPS by ~15%.

q The stock trades at 10x FY16E EPS of INR35.2 and 1.1x FY16E BV.

Maintain Buy.

q GRM at USD2.2/bbl in 4QFY14:

4QFY14 GRM below estimate at

USD3.3/bbl (est USD4/bbl), down

9% YoY and 54% QoQ. Adventitious

inventory loss stood at INR9.7b v/s

gain of INR9.6b in 4QFY13 and gainof INR9.2b in 3QFY14.

June 2014



OIL: Brent crosses USD111/bbl, WTI flat MoM

q While the Brent has been ranging

within USD107-112/bbl for the last 11

months it crossed USD111/bbl since

Dec-13 led by geopolitical issues.

Brent was up 2% MoM to averageUSD109.7/bbl in May-14.

q WTI remained flat MoM to

USD102/bbl as US achieves highest oil

production of 8.4mmbbl/d in May-14,

since 1988.

Brent oil price trend (USD/bbl) Brent forward curve (USD/bbl) Brent oil price in USD/bbl and INR/bbl

Crude price differentials (USD/bbl) Brent-WTI spread (USD/bbl) Indian basket price trend (USD/bbl)

YoY oil production and demand change (%) OPEC crude supply (mmbbl/d)

-4%

0%

4%

8%

79

84

89

94

Apr-06 Apr-08 Apr-10 Apr-12 Apr-14

Oi l Pr oduct Demand (mmbbl /d) YoY Chang e (% ) - RHS

2

4

5

7

8

25

27

29

31

33


Spare Capacity (RHS) OPEC SUPPLY

0

40

80

120

160

Dec-01 Apr-05 Aug-08 Dec-11 Apr-15 Aug-18

Brent Spot Aug-04 Mar-06

Mar-10 Mar-11 Mar-14Mar-13

13

30

60

90

120

150

May-06 May-08 May-10 May-12 May-14

-24

-12

0

12

24

0

3

6

9

12


Arab L-H WTI - Maya (RHS)

-30

-5

20

45

70

-10

0

10

20

30


Br en t - W TI (USD /b bl ) Oi l / Gas Rati o (x) - R HS

0

1,600

3,200

4,800

6,400

8,000

0

30

60

90

120

150


Brent (USD/bbl) Brent (INR/bbl)

30

60

90

120

150


June 2014



US Weekly Petroleum Data: Crude imports down 6% MoM

q US EIA estimates that U.S. total crude

oil production averaged almost

8.4mbbl/d in May, the highest

monthly average production since

March 1988.q US refinery utilization and Gasoline

inventory remains flat MoM .

q US crude imports are down 6% MoM

and 14% down last 3Yr avg led by

domestic supplies.

US crude oil inventory (mmbbl) US distillate inventory (mmbbl)

90

114

138

162

186

1 18 35 52Week

Range (2009-13) Average (2009-13) 2014

250

285

320

355

390

425

1 18 35 52Week

Range (2009-13) 2014 Average (2009-13)

US gasoline inventory (mmbbl)

170

190

210

230

250

1 18 35 52Week

Range (2009-13) Average (2009-13) 2014

US weekly total product supplied (mmbbl/d) US refinery utilization (%) US crude imports (mmbbl)

17

19

20

22

1 18 35 52Week

Range (2009-13) Range (2009-13) Average (2009-13)

75

85

95

1 18 35 52Week

Range (2009-13) Range (2009-13) Average (2009-13)

14

Variation (%) from

25-Apr-14 2-May-14 9-May-14 16-May-14 23-May-14 30-May-14 WoW YoY 1Yr Av g 3Yr Av g 5Yr Av g

Inventory Data (mmbbl)

Crude Oi l 399.4 397.6 398.5 391.3 393.0 389.5 -0.9 -0.5 3.9 6.2 8.2

Gasoline 211.6 213.2 212.4 213.4 211.6 211.8 0.1 -3.2 -3.6 -2.0 -2.4

Disti l lates 114.4 114.0 112.9 116.3 116.1 118.1 1.7 -4.2 -1.5 -7.5 -16.0

Products S upplied ( mmbbl/d)Total Products 19.6 19.6 19.6 19.6 19.6 18.6 -5.0 -1.0 -2.8 -1.4 -1.9

Gasoline 9.3 9.3 9.3 9.3 9.3 9.1 -2.2 3.2 3.2 4.1 2.6

Disti l lates 4.2 4.2 4.2 4.2 4.2 4.2 -1.0 10.8 7.4 10.2 11.2

Refinery

Util i zation (%) 91.0 90.2 88.8 88.7 89.9 90.8 1.0 2.7 1.5 3.4 5.0

Imports (mmbbl/d)

Crude Imports 7.5 6.9 7.1 6.5 7.8 7.1 -8.8 -2.0 -6.6 -13.6 -16.6

Gasoline 0.7 0.6 0.9 1.0 0.7 0.8 16.4 64.2 55.6 34.1 14.7

Week ended Variation (%)

6

7

8

9

10

11

1 18 35 52Week

Range (2009-13) Average (2009-13) 2014

June 2014



GRM: Down 8% MoM led by Auto fuels

q Reuters Singapore GRM was down 8%

MoM to USD6.0/bbl: This was led by

lower gasoline and gasoil cracks.

q Delays in the capacity addition

supported the GRM’s for the shortterm, but going forward expect GRM

to remain subdued as delayed

capacities will eventually come up

thereby exceeding capacity additions

v/s demand growth.

Gasoline spreads (USD/bbl) Diesel spreads (USD/bbl) LPG spreads (USD/bbl)

Naphtha spreads (USD/bbl) Jet/Kero spreads (USD/bbl) Fuel oil spreads (USD/bbl)

0

3

6

9

12

May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14

Reuters Singapore GRM (USD/bbl)

15

-9

0

9

18

27

May- 06 May-08 Ma y- 10 May- 12 May-14

0

10

20

30

40

May- 06 May- 08 May- 10 May- 12 May- 14

-60

-40

-20

0


-20

-10

0

10

20


0

10

20

30

40


-30

-20

-10

0

10


June 2014



GRM: Gasoil crack down -5%, and gasoline crack down -12%

Oil, Product Prices and Cracks (USD/bbl)

Singapore GRM down MoM (USD/bbl)

(USD/bbl) May-13 Apr-14 May-14 MoM (%) YoY (%) 1QFY14 4QFY14 1QFY15 QoQ (%) YoY (%) FY14 FY15 YoY (%) 1 Yr Avg 3 Yr Avg 5 Yr Avg

Singapore GRM 6.3 6.5 6.0 -8.1 -4.5 6.6 6.2 6.2 0.9 -5.0 5.6 6.2 11.4 5.7 7.1 6.1

16

(USD/bbl) May-13 Apr-14 May-14 M-o-M (%) Y-o-Y (%) 1QFY14 4QFY14 1QFY15 Q-o-Q (%) Y-o-Y (%) FY14 FY15 Y-o-Y (%)

Oil Prices

WTI 94.8 102.1 101.9 -0.2 7.5 94.2 98.7 102.0 3.3 8.3 99.0 102.0 3.0

Brent 103.0 107.8 109.7 1.8 6.5 103.0 107.9 108.7 0.8 5.6 107.6 108.7 1.1

Dubai 100.3 104.7 105.6 0.8 5.3 100.8 104.4 105.2 0.8 4.4 104.5 105.2 0.6

Indian Bas ket 101.2 105.7 105.5 -0.2 4.3 101.5 105.5 105.6 0.1 4.1 105.5 105.6 0.1

Product Prices

LPG 65.6 67.3 70.4 4.6 7.3 66.3 75.1 68.8 -8.3 3.9 73.4 68.8 -6.3

Gas ol ine 111.2 117.0 116.5 -0.5 4.8 112.2 115.7 116.8 0.9 4.0 114.1 116.8 2.3

Diesel 116.8 122.5 122.4 0.0 4.9 117.6 123.2 122.5 -0.6 4.1 122.8 122.5 -0.3

Jet/Kero 115.3 119.9 119.9 0.0 3.9 116.1 121.6 119.9 -1.4 3.2 121.1 119.9 -1.0

Naphtha 92.9 102.6 104.2 1.5 12.1 93.1 102.3 103.4 1.1 11.1 99.8 103.4 3.6

Fuel Oi l 98.8 94.7 95.3 0.6 -3.6 99.1 96.6 95.0 -1.7 -4.2 97.2 95.0 -2.3

Product Cracks (v/s D ubai)

LPG -34.7 -37.5 -35.2 5.9 -1.5 -34.5 -29.3 -36.3 -24.0 -5.3 -31.1 -36.3 -16.9

Gas ol ine 10.8 12.3 10.9 -11.7 0.3 11.5 11.3 11.6 2.3 1.2 9.6 11.6 21.0

Diesel 16.5 17.8 16.8 -5.1 2.4 16.9 18.8 17.3 -8.0 2.5 18.3 17.3 -5.4

Jet/Kero 15.0 15.1 14.3 -5.7 -5.0 15.3 17.3 14.7 -14.8 -4.1 16.6 14.7 -11.2

Naphtha -7.4 -2.1 -1.4 32.4 80.8 -7.7 -2.1 -1.8 16.4 77.1 -4.7 -1.8 62.8

Fuel Oi l -1.5 -10.1 -10.3 -2.7 -576.9 -1.6 -7.8 -10.2 -31.2 -528.7 -7.3 -10.2 -39.8

June 2014



Polymer Margins: PE down -3.5%, PP flat, PVC up 6% MoM

q Polymer margins: PE down -3.5%; PP

flat MoM & PVC up 6%.

q PP & PE spreads continue to stay

higher than their 5yr- range since >9

months.q Polyester and its intermediates spread

over naphtha remained flat MoM.

q Polyester price were up YoY (POY:

5.4%; PSF: 3.4%).

PE spread over naphtha (INR/kg) PP spread over naphtha (INR/kg) PVC spread over naphtha (INR/kg)

PE spread overn naphtha (USD/mt) PP spread over naphtha (USD/mt) PVC spread over naphtha (USD/mt)

Key polymer price trends (INR/kg) Premium/discount to international prices (INR/kg)

20

40

60

80

100

120


PE PP PVC

-20

0

20

40

60


PE PP PVC

20

28

36

44

52

60

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r

5 yr range FY14 FY15

20

28

36

44

52

60

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r


-10

0

10

20

30

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r


0

500

1,000

1,500

2,000


Naphtha Ethylene Polyethylene

0

600

1,200

1,800

2,400


Naphtha Propylene Polypropylene

0

450

900

1,350

1,800


Naphtha Price Ethylene PVC

17 June 2014

P l M i P l i i d fl i h PP PVC



Polymer Margins: Polymer prices remained flattish; PP, PVC

premium over imports saw a sharp increase

18

May-13 Apr-14 May-14 MoM (%) YoY (%) 1QFY14 4QFY14 1QFY15 QoQ (%) YoY (%) FY14 FY15 YoY (%)

Exch. Rate (INR/USD) 55.1 60.4 59.3 (1.7) 7.7 55.9 61.8 59.8 (3.1) 7.0 60.5 59.8 (1.1)

Naphtha (USD/MT) 818 903 917 1.5 12.1 819 900 910 1.1 11.1 878 910 3.6

Naphtha (INR/kg) 47 57 57 (0.2) 20.8 48 58 57 (2.1) 18.8 56 57 2.3

International Prices ( US$/MT)

PE 1,408 1,579 1,585 0.4 12.6 1,420 1,584 1,582 (0.1) 11.5 1,522 1,582 4.0

PP 1,433 1,530 1,543 0.8 7.6 1,439 1,538 1,536 (0.1) 6.7 1,496 1,536 2.7

PVC 965 1,018 1,028 1.0 6.5 983 1,046 1,023 (2.2) 4.0 1,013 1,023 0.9

Simple Spreads over Naphtha (USD/mt)

PE 590 676 669 (1.1) 13.4 600 684 672 (1.8) 12.0 644 672 4.5

PP 615 627 626 (0.2) 1.7 620 638 626 (1.9) 1.0 618 626 1.3

PVC 147 114 111 (3.2) (24.8) 164 146 113 (22.8) (31.4) 135 113 (16.7)

Domestic Prices (INR/kg)

PE 90.4 110.3 108.3 (1.8) 19.9 92.5 112.3 109.3 (2.7) 18.2 104.2 109.3 4.9

PP 91.2 108.0 108.0 0.0 18.4 95.9 113.0 108.0 (4.4) 12.7 107.1 108.0 0.8

PVC 60.5 75.9 76.9 1.3 27.1 63.3 74.3 76.4 2.8 20.6 70.7 76.4 8.1

Simple Spreads over Naphtha (INR/kg)

PE 43.0 53.1 51.2 (3.5) 18.9 44.3 53.9 52.1 (3.3) 17.5 48.3 52.1 7.9

PP 43.9 50.7 50.8 0.3 15.9 47.7 54.6 50.8 (6.9) 6.5 51.2 50.8 (0.8)

PVC 13.2 18.6 19.8 6.1 49.9 15.2 15.9 19.2 20.7 26.6 14.8 19.2 29.7

Prem/(Disc) to International Prices (%)

PE 10.9 7.5 7.0 (6.9) (35.9) 10.1 6.7 7.3 9.2 (27.8) 5.7 7.3 28.7PP 10.0 8.6 9.7 11.7 (3.4) 12.4 10.5 9.1 (12.8) (26.5) 10.3 9.1 (11.6)

PVC 8.4 14.8 17.2 16.2 106.1 8.8 6.9 16.0 131.6 82.5 7.6 16.0 111.4

June 2014

P l t M i I t t d l t d fl tti h M M



Polyester Margins: Integrated polyester spreads flattish MoM

after declining for 6 months

PTA and MEG price trend (INR/kg)POY and PSF price trend (INR/kg) PTA spread over naphtha (INR/kg)

POY spread over naphtha (INR/kg) PSF spread over naphtha (INR/kg) MEG spread over naphtha (INR/kg)

19

28

38

48

58

68

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r


22

38

54

70

86

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r


0

15

30

45

60

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r


6

16

26

36

46

A p r

M a y

J u n

J u l y

A u g

S e p t

O c t

N o v

D e c

J a n

F e b

M a r

5 yr range Last 5 yr avg. FY15

0

50

100

150

200

250

50

70

90

110

130


POY PSF Cotlook A (cents/lbs) - RHS

20

35

50

65

80

95


PTA MEG

(INR/kg) May-13 Apr-14 May-14 MoM (%) YoY (%) 1QFY14 4QFY14 1QFY15 QoQ (%) YoY (%) FY14 FY15 YoY (%)

Polyester Intermediates Prices

PTA 61.5 61.8 61.8 0.0 0.5 63.3 65.6 61.8 (5.8) (2.4) 67.8 61.8 (8.8)

MEG 58.7 62.2 62.0 (0.3) 5.6 59.7 67.5 62.1 (8.0) 4.0 67.2 62.1 (7.5)

Polyester PricesPOY 94.0 99.1 99.1 0.0 5.4 95.0 97.9 99.1 1.2 4.3 100.9 99.1 (1.8)

PSF 94.8 98.3 98.3 0.0 3.7 96.3 100.9 98.3 (2.6) 2.1 102.8 98.3 (4.4)

Integrated Polyester Spreads

POY 56.6 53.4 53.5 0.2 (5.4) 56.9 51.4 53.5 4.0 (6.0) 56.5 53.5 (5.3)

PSF 57.3 52.6 52.7 0.2 (8.0) 58.1 54.4 52.6 (3.2) (9.4) 58.4 52.6 (9.8)

June 2014

I di R fi th h t d d ti f l ti



India Refinery throughput and domestic fuel consumption:

Auto fuel demand increased MoM

Total consumption (kbpd) Petrol consumption (kbpd) Diesel consumption growth (YoY) (kbpd)

Domestic fuel consumption statistics

Refinery throughput trend

20

Monthly Comparison

KBPD Apr-13 Mar-14 Apr-14 MoM (%) YoY (%) 1QFY14 4QFY14 1QFY15 QoQ (%) YoY (%) FY14 FY15 YoY (%)

Tota l 3,648 3,881 3,563 (8.2) (2.3) 3,677 3,827 3,563 (6.9) (3.1) 3,731 3,563 (4.5)

PSUs

HPCL 456 573 506 (11.8) 10.8 457 561 506 (9.9) 10.6 501 506 1.0

BPCL 524 597 515 (13.7) (1.8) 572 578 515 (11.0) (10.1) 574 515 (10.3)

IOC 1,007 1,151 1,122 (2.5) 11.3 1,063 1,110 1,122 1.0 5.6 1,072 1,122 4.6

MRPL 303 337 270 (19.8) (11.0) 270 315 270 (14.3) 0.1 295 270 (8.4)

CPCL 232 239 224 (6.4) (3.5) 229 231 224 (3.0) (2.2) 215 224 4.2

Private

RIL 652 528 458 (13.2) (29.7) 632 565 458 (18.9) (27.5) 613 458 (25.2)

ESSAR 417 413 416 0.9 (0.2) 416 413 416 0.7 0.0 408 416 2.1

Annual ComparisonQuarterly Comparison

kbpd Apr-13 Mar-14 Apr-14 MoM (%) YoY (%) 1QFY14 4QFY14 1QFY15 QoQ (%) YoY (%) FY14 FY15 YoY (%)Total 3,215 3,357 3,292 (1.9) 2.4 3,255 3,303 3,292 (0.3) 1.2 3,178 3,292 3.6

Key Products

Petrol 360 408 425 4.2 18.2 409 402 425 5.8 4.1 399 425 6.6

Naphtha 275 279 258 (7.5) (6.0) 266 289 258 (10.7) (3.0) 276 258 (6.5)

LPG 477 572 522 (8.9) 9.4 472 567 522 (8.0) 10.6 519 522 0.4

Diesel 1,538 1,472 1,484 0.8 (3.5) 1,524 1,426 1,484 4.1 (2.6) 1,405 1,484 5.6

Kerosene 154 149 152 1.7 (1.6) 154 155 152 (2.1) (1.5) 153 152 (0.9)

ATF 117 124 120 (3.2) 2.6 116 123 120 (2.5) 4.0 118 120 2.3

Fuel Oi l 117 114 107 (6.4) (8.7) 113 111 107 (3.0) (5.3) 114 107 (5.6)

Annual ComparisonQuarterly ComparisonMonthly Comparison

-10%

0%

10%

20%

200

250

300

350

400

450


Petrol YoY (%)

-10%

-5%

0%

5%

10%

15%

2,250

2,500

2,750

3,000

3,250

3,500


Total YoY (%)

-10%

0%

10%

20%

30%

700

900

1,100

1,300

1,500

1,700


Diesel YoY (%)

June 2014

Domestic production and Import/Export of oil/gas:



Domestic production and Import/Export of oil/gas:

April-14 Gas production at 92mmscmd, down -8% YoY

Net imports in India (USDb) Domestic gas production – yearly (mmscmd) Domestic crude oil production - yearly (kbpd)

Net imports in India (mmbbl/d) Domestic gas production (bcm) Domestic crude oil production (TMT)

Domestic crude oil production - monthly (kbpd)Domestic gas production - monthly (mmscmd)q Gas production averaged at

92mmscmd in Apr-14, down 1% MoM.

q Apr-14 crude oil imports stood at

4.1mmbbl/d v/s 3.5mmbbl/d in Mar-

14, and the value of net importsincreased to USD9.5b for Apr-14 v/s

USD6.8b in Mar-14.

3.1 3.12.5 2.9 3.0

2.3 2.6 2.5 2.6 2.9 3.32.4

3.3

(2)

0

2

4

6

Apr-13 Aug-13 Dec-13 Apr-14

Crude oil Imports Product Imports

Product Exports Net imports

8.8 8.66.5 8.0 8.5

6.4 7.9 7.2 7.8 8.5 8.86.8

9.5

(7)

3

13


Crude oil Imports Product ImportsProduct Exports Net imports

21

64 63 64 63 62 64 63 64 64 65 65 63 60

7 7 7 7 7 7 7 8 7 7 7 6 8

29 27 27 27 26 27 25 25 25 27 26 23 24

100 97 98 97 96 98 96 96 97 99 98 93 92


ONGC OIL JV TotalNatural Gas (mmscmd)

456 451 451 445 445 448 444 444 447 452 455 450 438

73 71 73 71 73 74 72 73 69 66 68 58 67234 232 244 239 238 236 240 256 258 257 248 246 257

763 754 767 756 756 757 756 772 774 775 772 755 763

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

ONGC OIL JV TotalCrude oil (kbpd)

3.0

3.0

2.9

3.0

3.0

2.9

3.0

2.9

3.0

3.12.8

2.9

2.8


3,106

3,171

3,123

3,179 3,180

3,081

3,179

3,141

3,256 3,261

2,931

3,1743,104


61 62 64 63 64 65 64 60

6 6 7 6 7 7 7 821 22

60 73 59 40 26 24

89 90

131143

130112

97 92

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

ONGC OIL JV TotalNatural Gas (mmscmd)

524 512 505 489 477 457 449 438

63 70 72 73 77 74 70 67

103 94 109 194 211 235 244 257

689 677 687757 766 766 763 763

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

ONGC OIL JV TotalCrude oil (kbpd)

June 2014



Under recoveries trend and domestic fuel pricing

q Latest fortnight daily under recovery

run-rate at INR2.7b, implying annual

under recovery at INR980b.

q Impact of INR1/ltr price hike on under

recoveries

§ Diesel : ~INR80b

§ Kerosene: ~INR10b

§ LPG hike of INR25/cyl: ~INR26b

Domestic retail diesel price trend (INR/lt) Domestic retail Kerosene price trend (INR/cyl) Domestic retail LPG price trend (INR/cyl)

Fortnightly diesel under recoveries (INR/lt) Fortnightly kerosene under recoveries (INR/lt) Fortnightly LPG under recoveries (INR/cyl)

Petrol and diesel price difference (INR/lt)

-20%

-10%

0%

10%

20%

-

12

24

36

48

60

Jun-06 Jun-08 Jun-10 Jun-12 Jun-14

Diesel (INR/ltr) Chg (%) - RHS

-20%

-10%

0%

10%

20%

-

17

34

51

68

85


Petrol (INR/ltr) Chg (%) - RHS

Domestic retail petrol price trend (INR/lt)

-10%

0%

10%

20%

30%

-

5

10

15

20


Kerosene (INR/ltr) Chg (%) - RHS

-20%

-10%

0%

10%

20%

-

100

200

300

400

500


LPG (INR/Cyl) Chg (%) - RHS

22

4 . 9

8 . 1 9 . 3

1 2 . 1

1 0 . 5

9 . 6

1

0 . 0

9

. 7

7 . 4 8 . 4

5 . 9 6

. 8

4 . 4

2 . 8

M a y - 1 3

J u n - 1 3

J u l y - 1 3

A u g - 1 3

S e p - 1 3

O c t - 1 3

N o v - 1 3

D e c - 1 3

J a n - 1 4

F e b - 1 4

M a r - 1 4

A p r - 1 4

M a y - 1 4

2 7

. 8

3 0 . 7

3 3 . 5

3 6 . 8

3 8 . 3

3 5 . 8

3 6 . 2

3 7 . 3

3 5 . 8

3 6 . 3

3 4 . 4

3 3 . 9

M a y - 1 3

J u n - 1 3

J u l y - 1 3

A u g - 1 3

S e p - 1 3

O c t - 1 3

N o v - 1 3

D e c - 1 3

J a n - 1 4

F e b - 1 4

M a r - 1 4

A p r - 1 4

M a y - 1 4

3 3 5

3 6 9 4 1

2 4 7 0

5 3 3

4

8 2

5 4 3

7 6 3

6 5 6

6 0 6

5

0 6

4 4

9

M a y - 1 3

J u n - 1 3

J u l y - 1 3

A u g - 1 3

S e p - 1 3

O c t - 1 3

N o v - 1 3

D e c - 1 3

J a n - 1 4

F e b - 1 4

M a r - 1 4

A p r - 1 4

M a y - 1 4

10

25

40

55

70

85


Petrol DieselRetail prices (INR/ltr)

June 2014



Under recoveries: Model upstream share at INR645b in FY15

We model upstream sharing at INR645b/437b in FY15/FY16

Note: We have assumed a diesel price hike of INR0.45/lt every month in our estimates

Under recoveries sensitivity (FY15E) to Brent crude price

(USD/bbl) and Exchange rate (INR/USD)

23 June 2014



Industry News - International

ORussia, China Sign $400 Billion Gas Deal

After Decade of Talks

Russia and China have signed a long-

awaited gas supply agreement.

There have been no details about the cost

of the deal but it has been unofficially

valued at more than $400bn.

Russia is expected to supply China with

gas via a new eastern pipeline linking the

two countries.The 30-year accord for 38bcm a year (3.8

billion cubic feet a day) of supplies from

2018 by pipeline from eastern Siberia was

probably reached at a price of $10.50 to

$11 per million British thermal units as

per media reports and sets a floor for

LNG.

Poland PM Donald Tusk is pressing EU

partners on creating an energy union

Galvanised by the growing uncertainty

over Russia, Donald Tusk, Poland's prime

minister, is pressing his EU partners on

creating an energy union that would

reduce Moscow's dominance over

European energy markets.

Poland – which imports about 60% of the

16bcm of gas it uses every year from

Russia – now pays one of the highestprices in Europe for Russian gas – about

USD500 per 1,000 cubic metres compared

to about USD370 paid by Germany.

Oil demand growth (mmbbl/d) 2012 2013 2014 Remarks

IEA (Oil Market Report) 0.9 1.2 1.3 Global oil demand is expected to keep the momentum of 2H13 and

continue to grow in 2014, led by emerging economies: non-OECD Asia toaccount for 50% of the gain.

OPEC (Oil Market Report) 0.8 1.0 1.1 The bulk of growth is coming from non-OECD: China & Middle East

together to account for >50%.

EIA (Short-Term Energy Outlook) 0.7 1.2 1.3 Expect Non-OECD countries to account for all consumption growth

(China to account for 400,000bbl/d of consumption growth in 2014.

Oil Demand growth estimates from IEA, OPEC, EIA

24

Iraq Oil industry faces setback to revival

After a long history of wars and sanctions,

Iraq re-emerged as a critical source of oil

in recent years. Mounting Iraqi production

helped to ease world oil prices despite the

tightening restrictions on Iran and tanking

exports from Libya. And Western and

Chinese oil companies rushed back,

revitalising long-neglected oil fields in the

north and south.

Now suddenly all progress is in jeopardywith the intense military offensive by

extremist insurgents. An eventual decline

in Iraqi exports would put pressure on

China and India to increase their imports

of Iranian oil again, weakening the US

government's position in negotiations

with Tehran over nuclear policies.

June 2014



Industry News - Domestic

Petroleum Minister at World Petroleum

Congress: Energy policy must serve

broader economic growth and its

benefits should not exclude the poor

Union Minister of State (I/C) of Petroleum

and Natural Gas Sh. Dharmendra Pradhan,

outlined the importance of innovation,

partnerships, simplification of the

regulatory regimes, rule of law, promotion

of renewable energy in achieving our

goals of energy security in line with the

priorities of the new government.

To focus on promoting fiscal andregulatory regimes that are stable and

equitable to both investors and owners of

natural resources. He called for enhancing

technology collaboration across the value

chain since we have to delve deeper and

explore in more difficult areas for oil and

gas, including shale gas and tight oil.

The Minister said that his visit to Moscowhas given him an opportunity to renew

the deep and multifaceted ties between

the two countries. He said that Russia has

always been a longstanding, time-tested

friend and a strategic partner and energy

is an essential element of our relationship.

RIL takes control of Network18

The RIL board on Thursday May 29, 2014

approved funding of up to INR40b to IMT,

which will use the funds to acquire a 78%stake in Network18, a 9% stake in TV18

and shares tendered in an open offer to

be made for public shareholders’ equity

stake in Network18, TV18 and Infomedia

Press Ltd (the publishing arm of

Network18). JM Financial was the banker

for the offer.

Some key management executives ofNetwork18 — Group CEO B Sai Kumar,

COO Ajay Chacko and CFO R D S Bawa —

had quit over the past two days. A day

after the deal was announced, Network18

Founder and Managing Director Raghav

Bahl quit the media group after agreeing

to sell controlling stake to RIL for INR40b.

According to an RIL statement, this

acquisition would prove a boost for

Reliance Jio, the firm’s 4G business, by

providing an amalgamation at the

intersect of telecom, web and digital e-

commerce.

25

Major refinery turnarounds:

IOCL:

Mathura refinery to be shut for 45days

from August-end, 2014.HPCL:

HPCL planned to shut >50% of its crude

processing capacity at its 130,000bpd

Mumbai refinery for 45days for

maintenance starting from May 2014.

GAIL stake in ONGC petrochem project to

come down to 11.6%

GAIL India’s stake in ONGC's mega

petrochem project at Dahej stands at

11.6% as project faces major cost overrun.

GAIL had in FY09 picked up 19% stake in

ONGC Petro-additions Ltd (OPaL), which is

building a mega petrochemical complex at

Dahej in Gujarat.

The 1.1 million tonnes plant was at thattime estimated to cost INR124b. But since

then the project cost has been revised

thrice upwards - first to INR159b in end

2008, then to INR195b in June 2010 and

now to INR214b. The INR10b invested in

FY09 gives GAIL 11.6% stake in OPaL.

June 2014



O&G stock performance

Relative stock performance (%)

Absolute stock performance (%)

14

16

19

2

24

15

37

112

7

0

0 10 20 30 40

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

CairnIGL

PLNG

GSPL

1 MONTH ABSOLUTE

33

30

25

2

51

38

45

427

28

26

0 20 40 60

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

CairnIGL

PLNG

GSPL

3 MONTH ABSOLUTE

25

26

18

12

86

54

79

416

17

22

0 50 100

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

CairnIGL

PLNG

GSPL

6 MONTH ABSOLUTE

27

13

(5)

18

22

19

15

9

26

(10) 10 30

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

Cairn

IGL

PLNG

GSPL

1 YEAR ABSOLUTE

6

8

11

(6)

16

7

29

(7)

4

(1)

(8)

(8) 2 12 22 32

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

Cairn

IGL

PLNG

GSPL

1 MONTH RELATIVE

18

15

10

(13)

37

23

30

(11)

13

14

11

(20) 0 20 40

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

Cairn

IGL

PLNG

GSPL

3 MONTH RELATIVE

8

10

2

(5)

70

37

63

(12)

(1)

1

6

(20) 0 20 40 60 80

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

Cairn

IGL

PLNG

GSPL

6 MONTH RELATIVE

7

(7)

(25)

(2)

2

(1)

(5)

(11)

6

(30) (10) 10

RIL

ONGC

OIL

GAIL

HPCL

BPCL

IOC

Cairn

IGL

PLNG

GSPL

1 YEAR RELATIVE

26 June 2014



Summary of Valuation comparison to Global peers

*All averages are weighted averages

M. Cap P/E (x) P/BV (x) EV/EBIDTA (x)

(USDb) CY12/FY13 CY13/FY14 CY14/FY15 CY12/FY13 CY13/FY14 CY14/FY15 CY12/FY13 CY13/FY14 CY14/FY15

Integrated Oil Companies

Reliance Industries 58.2 14.8 14.2 12.7 1.7 1.6 1.4 10.9 11.3 10.5

Big 5 average 11.0 12.5 11.9 2.0 1.9 1.7 4.9 5.4 5.3

North America average 15.1 15.1 13.7 1.8 1.8 1.7 5.6 5.5 5.3

Europe average 18.9 16.7 15.3 1.1 1.0 1.1 4.3 4.9 5.0Asia & Others average 10.9 11.0 9.7 1.2 1.1 1.1 6.2 5.6 5.2

Global Average 13.5 13.2 11.9 1.4 1.3 1.3 5.7 5.5 5.2

Upstream Companies

ONGC 54.7 13.4 12.2 10.9 2.1 1.9 1.7 5.7 5.4 4.9

Oil India 5.8 9.6 11.5 10.3 1.8 1.7 1.5 5.5 9.1 7.2

Cairn India 10.9 5.3 5.2 6.3 1.4 1.1 1.0 4.4 3.8 3.7


Europe average 13.3 14.2 15.2 2.0 1.9 1.8 4.5 4.9 5.1

Asia & Others average 17.1 16.5 12.7 2.0 1.8 1.6 9.3 8.6 5.9

Global Average 21.0 18.3 15.6 2.3 2.2 1.9 7.7 6.9 5.9

Refiners

BPCL 6.4 20.1 9.6 12.8 2.2 2.0 1.8 10.4 7.0 7.7

CPCL 0.2 NA NA NA 0.7 0.7 0.6 NA NA 5.7HPCL 2.3 15.0 7.8 14.3 1.0 0.9 0.9 12.6 9.2 9.6

IOC 14.8 19.7 12.4 12.1 1.4 1.3 1.2 13.1 10.7 8.0

MRPL 2.0 NA NA 11.4 1.8 1.7 1.5 21.3 10.4 6.5


Europe average 23.4 13.3 12.4 1.2 1.1 1.0 5.9 8.8 6.8

Japan average 4.3 10.6 30.3 1.5 1.3 1.2 15.9 11.2 12.6


Global Average 10.1 15.9 15.5 1.6 1.7 1.6 10.1 9.3 5.6

Gas Utiliti es

GAIL 8.1 11.9 11.9 12.1 2.0 1.8 1.6 4.9 4.7 4.3

GSPL 0.7 7.6 9.8 8.8 1.4 1.2 1.1 4.7 5.5 5.2

IGL 0.8 12.7 12.4 11.5 3.0 2.5 2.2 6.3 5.9 5.2

Petronet LNG 2.0 10.1 16.3 15.1 2.6 2.1 1.8 7.8 9.5 8.2North America average 27.2 26.6 23.8 3.1 3.1 2.8 14.4 12.4 11.1


Global Average 27.2 26.1 23.6 3.4 3.3 3.0 14.6 12.7 11.3

Petrochemical Companies


Europe average 16.8 16.9 15.8 2.8 2.7 2.5 8.3 9.1 8.7

Japan average 19.4 18.9 19.4 1.5 1.5 1.3 8.4 9.3 8.2


Global Average 28.2 17.7 15.7 2.4 2.3 2.1 11.9 10.9 9.4

27 June 2014



Integrated Companies: Global Peer Comparison

INTEGRATED E&P M Cap

(USD b) 1-M 3-mo 6-M 1-Yr 3-Yr 1-M 3-mo 6-M 1-Yr 3-Yr

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

Indian Companies

Reliance Inds 57 -1.3 20.2 26.1 30.8 - -5.5 4.1 3.4 -0.4 - 16.7 16.2 14.9 2.0 1.8 1.7 11.7 12.5 11.8

International Majors

BP 159 0.3 6.5 7.5 12.1 10.1 1.7 2.9 3.7 4.6 0.2 9.5 11.7 10.7 1.4 1.3 1.2 4.9 5.0 4.8

Chevron 242 3.3 11.5 5.9 5.8 12.4 1.6 6.8 0.2 -5.0 -2.2 10.3 11.5 11.9 1.8 1.7 1.5 4.4 4.9 4.8

Exxon Mobil 441 1.9 9.8 5 .6 13.3 11.9 0 .2 5.2 0.0 1.8 -2.6 13.0 13.9 13.2 2.8 2.6 2.4 5.3 6.0 6.2

Royal Dutch Shell 262 1.7 11.4 15.2 14.1 9.1 3.1 7 .5 1 0.9 6.2 -0.6 9.6 12.7 11.1 1.4 1.4 1.3 5.0 5.6 4.9

Total 170 1.3 14.5 25.0 40.7 18.3 2.7 10.6 20.6 31.3 7 .7 9.8 10.9 11.2 1.7 1.6 1.5 4.5 4.7 4.8

Weighted Average 11.0 12.5 11.9 2.0 1.9 1.7 4.9 5.4 5.3

US/Canada

ConocoPhillips 102 6.4 24.7 19.0 36.1 20.4 4.6 19.5 12.7 22.3 4.8 14.6 14.8 13.0 1.9 2.0 1.8 5.0 5.2 4.9

Hess Corp 30 9.8 19.5 20.9 45.4 11.2 7 .9 14.5 14.5 30.7 -3.2 16.2 16.8 19.8 1.5 1.3 1.2 4.5 4.6 5.4

Marathon 26 9.0 18.1 9.8 13.7 11.4 7.2 13.1 4.0 2.1 -3.1 15.2 13.4 12.9 1.4 1.3 1.3 3.5 3.4 3.9Occidental 81 7.9 7.0 13.5 12.3 3.0 6.1 2.4 7.5 0.9 -10.3 14.9 14.9 14.4 2.0 1.9 1.9 6.1 5.9 5.8

Husky Energy 33 2.6 12.8 18.2 31.9 14.8 0.8 8.1 11.9 18.5 -0.1 17.3 17.8 13.0 1.9 1.8 1.7 7.2 6.7 5.9

Suncor Energy 63 10.0 30.6 25.4 40.3 5.4 8.2 25.1 18.8 26.0 -8.3 14.4 14.6 11.5 1.7 1.7 1.5 6.5 6.2 5.4


Europe

ENI 96 5.0 14.2 17.3 16.2 14.1 6 .4 10.3 13.2 8.4 3.9 9.7 15.6 14.9 1.2 1.2 1.2 3.2 4.1 4.0

MOL 6 -4.6 2.7 -12.3 -24.3 -15.5 -3.1 -0.8 -15.4 -29.4 -23.0 6.6 12.5 9.4 0.7 0.7 0.7 4.0 4.5 4.7

Norsk Hydro 11 2.7 16.7 30.8 29.9 -2.9 4.1 12.7 26.2 21.2 -11.6 136.6 46.9 33.6 0.9 1.0 1.0 12.9 11.4 9.2

OMV 14 4.0 1.3 -6.5 -12.6 7.9 5 .3 -2.1 -9.8 -18.5 -1.8 7.0 8.6 8.7 0.9 0.8 0.8 3.5 3.7 3.6

Repsol YPF SA 35 1.8 18.3 12.7 18.3 3.9 3.2 14.3 8.7 1 0.4 -5.4 12.4 13.8 14.2 0.9 0.9 0.9 5.1 5.6 6.7Weighted Average 18.9 16.7 15.3 1.1 1.0 1.1 4.3 4.9 5.0

Others

China Petroleum & Chem 101 5.8 12.9 15.9 35.8 14.1 3.2 4.7 15.1 24.6 0.8 11.1 10.1 9.5 1.3 1.2 1.1 6.0 5.4 4.9

CNOOC 80 4.5 19.6 -5.4 6.6 -6.1 1.9 10.6 -6.2 -4.1 -10.5 7.7 7.9 8.8 1.6 1.4 1.3 4.4 3.9 3.9

Petrobras 108 5.2 48.6 9.5 5.1 -2.1 6.5 43.5 5 .7 -1.9 -10.9 11.7 10.4 9.3 0.7 0.7 0.7 7.8 7.0 6.4

PetroChina 224 3.8 24.9 10.8 15.8 -0.1 1.2 15.5 9 .9 4.2 -4.7 11.8 13.1 10.5 1.3 1.2 1.1 6.1 5.7 5.3


Global Average 18.1 14.6 12.9 1.5 1.4 1.3 5.6 5.6 5.3

Abs performance (%) PE (x) P/BV (x) EV/EBIDTA (x)Relative performance (%)

28

Source: Bloomberg

June 2014



Upstream Companies: Global Peer Comparison

UPSTREAM MCap

(USDb) 1-M 6-M 1-Yr 3-Yr 1-M 6-M 1-Yr 3-Yr

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

US

Anadarko 55.2 10.4 38.3 27.0 15.7 8.5 31.0 14.1 0.7 32.7 26.3 21.3 2.6 2.3 2.8 7.7 7.0 6.0

Apache Corp 37.7 10.0 13.4 15.0 -4.8 8.1 7.4 3.3 -17.2 10.2 12.0 14.0 1.2 1.1 1.1 3.9 4.2 4.5Chesapeake Energy 20.3 10.2 13.8 47.3 4.1 8.4 7.8 32.4 -9.4 62.8 18.5 14.8 1.6 1.5 1.4 11.0 7.2 6.5

Devon Energy Res 31.8 10.4 29.2 43.7 1.6 8.6 22.3 29.1 -11.6 24.2 18.4 13.3 1.4 1.4 1.2 10.1 8.9 6.8

EOG Resources 62.3 11.2 42.8 73.1 30.4 9.4 35.2 55.5 13.5 41.7 28.0 21.2 4.3 4.0 2.4 11.0 8.5 7.2

Murphy Oil 11.7 8.6 3.1 20.0 9.6 6.7 -2.4 7.8 -4.6 11.8 12.0 13.0 1.3 1.3 1.3 4.2 4.0 3.8

Noble Energy 27.5 9.3 9.8 31.6 22.5 7.4 4.0 18.2 6.6 33.3 24.7 23.6 3.4 3.0 2.8 9.9 8.8 7.8

Occidental 81.1 7.9 13.5 12.3 3.0 4.5 -0.3 -10.8 -5.2 14.9 14.9 14.4 2.0 1.9 1.9 6.1 5.9 5.8

Southwestern Energy Co 16.2 2.0 20.7 25.4 3.6 0.3 14.3 12.6 -9.9 33.2 22.9 18.3 4.5 4.3 3.6 11.8 9.1 7.4


Canada -

Canadian Natural Resource 48.2 10.9 41.3 64.3 9.3 7.6 27.5 41.3 1.1 30.2 21.4 13.2 2.2 2.0 1.8 8.7 7.3 5.8

Encana 18.1 7.7 39.6 49.3 -1.5 4.4 25.8 26.2 -9.8 19.0 25.5 14.9 2.5 3.1 3.0 17.4 8.3 6.4Weighted Average 27.1 22.5 13.7 2.2 2.3 2.1 11.0 7.6 5.9

Europe -

BG Group 73 (2) 2 6 (1) (0) (1) (1) (10) 15.7 16.4 19.6 2.2 2.1 2.0 7.5 8.0 8.5

Statoil 101.1 5.8 34.9 49.8 17.4 7.2 30.2 39.9 NA 11.5 12.6 12.0 1.9 1.7 1.6 2.4 2.7 2.6


Asia Pacific & Russia -

Aus.Worldwide Expl'n 0.9 15.5 49.2 55.3 12.7 16.6 41.0 37.6 12.7 26.3 35.1 27.1 1.0 1.1 1.0 5.7 5.7 4.7

Cairn India 11.6 7.7 13.1 26.4 4.8 3.1 -7.3 -3.7 NA 8.5 6.1 5.8 1.5 1.2 1.2 4.9 3.8 3.7

CNOOC 80.1 4.5 -5.4 6.6 -6.1 1.9 -6.2 -4.1 -6.1 7.7 7.9 8.8 1.6 1.4 1.3 4.4 3.9 3.9

Oil Search 14.0 6.7 23.8 24.8 13.4 7.9 17.0 10.5 13.4 78.1 62.3 26.2 3.9 3.6 2.7 44.4 39.5 15.5

ONGC 60.7 11.1 54.3 37.2 20.3 6.4 26.6 4.4 20.3 13.7 14.2 13.9 2.8 2.4 2.2 6.8 7.0 6.7

Roc Oil 0.4 11.1 34.1 14.6 19.1 12.2 26.7 1.5 19.1 9.7 8.7 6.1 1.7 1.3 1.0 1.9 2.0 1.6

Santos 13.5 2.6 4.9 15.6 4.0 3.9 -0.9 2.4 4.0 23.6 26.1 22.4 1.5 1.4 1.4 11.4 10.9 9.0

Tap Oil 0.1 -7.3 -9.2 -9.2 -22.0 -6.0 -14.2 -19.5 -22.0 20.2 NA 27.8 0.5 0.6 0.6 15.9 - 7.8

Woodside 33.1 2.6 15.1 22.8 3.9 3.8 8.8 8.8 3.9 15.7 17.9 13.9 2.2 2.2 2.1 8.2 8.7 7.0

Average 24.1 20.1 16.3 2.2 2.0 1.8 9.6 8.0 6.2

PE P/BV EV/EBIDTAAbsolute price performance (%) Relative price performance (%)

29

Source: Bloomberg

June 2014



Refining Companies: Global Peer Comparison

GLOBAL REFINERIES MCap

(USDb) 1M 6M 1-Yr 3-Yr 1M 6M 1-Yr 3-Yr

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

India (INR)

Reliance Industries 57 -1.3 26.1 30.8 - -5.5 3.4 -0.4 - 16.7 16.2 14.9 2.0 1.8 1.7 11.7 12.5 11.8

Bharat Petroleum 7 7.0 74.3 60.2 25.7 2.5 43.0 22.0 11.1 35.0 24.3 19.7 2.6 2.5 2.3 15.5 11.7 10.0

Hindustan Petroleum 2 0.8 90.8 55.7 5.7 -3.5 56.5 18.5 -6.7 15.4 18.8 14.8 1.0 1.0 1.0 16.2 11.9 10.7

Indian Oil Corporation 14 2.5 69.8 33.3 3.7 -1.9 39.3 1.5 -8.4 13.2 12.4 14.5 1.4 1.3 1.2 10.4 9.6 9.6

Chennai Petroleum 0 8.7 37.9 3.6 -25.1 4.0 13.1 -21.1 -33.9 - - - - - - - - -

MRPL 2 7.5 61.1 64.4 -3.8 2.9 32.1 25.2 -15.0 - - - - - - - - -


US 0

Tesoro Corp 7 4.8 -1.0 1.1 41.8 3.0 -6.3 -9.2 23.4 8.5 19.1 10.8 1.8 1.8 1.6 5.0 7.8 5.5

Valero/UDS 29 -2.5 15.0 41.4 37.0 -4.1 8.8 27.0 19.3 11.0 13.1 8.3 1.6 1.5 1.3 5.4 6.0 4.4


Europe 0

ERG Spa 2 2.5 27.5 66.3 18.1 3.8 23.0 55.2 7.5 220.6 41.6 21.2 1.0 0.9 1.0 6.8 5.1 6.1Hellenic (Greece) 3 18.6 -21.5 -17.0 2.3 19.7 -24.3 -22.5 -6.8 8.5 - 33.0 0.8 0.8 0.9 9.4 22.0 11.2

OMV Ag 14 3.7 -6.9 -12.3 8.0 5.0 -10.1 -18.2 -1.7 7.0 8.6 8.7 0.9 0.8 0.8 3.5 3.7 3.6

Polski Koncern Naftowy Orlen (Poland) 6 -8.7 -7.8 -23.4 -6.0 -7.2 -11.1 -28.5 -14.4 7.1 25.6 14.6 0.6 0.6 0.6 5.3 8.7 7.1

Saras 1 -4.6 28.8 -6.8 -11.8 -3.1 24.3 -13.0 -19.7 - - - 0.8 1.0 1.1 4.5 10.9 6.9

Tupras Turkiye Petrol Rafine (Turkey) 6 3.7 8.9 10.3 12.9 5.1 5.1 3.0 2.8 10.4 10.2 9.6 2.7 2.4 2.0 10.9 16.3 12.9


Japan 0

Cosmo Oil 2 16.8 14.9 24.1 0.7 10.2 16.1 5.5 -15.5 - - 43.3 0.6 0.7 0.8 10.0 11.9 13.7

Showa Shell Sekiyu 4 17.9 10.3 68.5 20.9 11.2 11.6 43.2 1.5 NA 9.1 13.1 1.8 1.6 1.4 13.0 6.9 7.4

TonenGeneral 6 10.3 6.0 5.4 4.8 4.2 7.3 -10.4 -12.1 9.1 15.3 39.7 1.6 1.2 1.2 20.1 14.3 16.4


Asia 0

Formosa Petrochemical 24 1.8 -5.2 -1.9 -5.6 -1.7 -14.3 -15.4 NA NA 29.0 24.4 3.5 3.1 3.0 31.9 17.4 -

Petron Corp 3 -2.5 -15.2 -15.5 -3.4 -1.6 -27.1 -21.9 -19.9 55.5 29.3 20.9 2.2 1.8 1.6 19.4 12.6 10.7

S-Oil Corp 6 -1.9 -20.7 -27.9 -24.6 -0.9 -22.0 -31.7 -24.8 7.5 15.6 16.1 1.2 1.2 1.1 6.7 10.2 10.9


Average 26.1 18.7 17.4 1.6 1.7 1.6 11.9 11.0 9.5

PE P/BV EV/EBIDTAAbsolute price performance (%) Relative performance (%)

30

Source: Bloomberg

June 2014



Petrochemical: Global Peer Comparison

31

MCap Absolute price performance (%) Relative price performance (%)

(USDb) 1M 6M 1Yr 3Yr 1-mo 6-mo 1-yr 3-yr

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

CY12/

FY13

CY13/

FY14

CY14/

FY15

US

Dow Chemicals 63.1 7.0 26.0 54.1 18.6 5.2 19.3 38.4 3.2 27.2 23.0 17.8 2.8 2.8 2.4 11.0 10.3 9.1

Eastman Chemicals 13.3 5.5 21.0 25.1 24.0 3.7 14.6 12.4 7.9 16.5 14.0 12.8 4.7 3.5 3.2 10.7 8.8 8.6

Olin Corp. 2.2 2.6 -0.1 15.6 13.2 0.8 -5.4 3.8 -1.4 15.2 14.1 15.6 2.0 1.9 1.8 7.3 6.2 6.6

Westlake 11.0 9.2 44.3 68.4 52.0 7.4 36.7 51.3 32.3 29.4 19.4 15.0 5.6 4.8 3.8 14.9 10.1 8.2

Polyone 3.8 8.5 17.9 60.3 43.9 6.7 11.6 44.0 25.3 33.8 31.5 22.7 - - - 16.1 12.8 10.3


Europe 0.0

BASF 106.1 3.6 13.6 17.5 14.7 5.0 9.7 9.7 4.4 15.7 15.8 14.5 3.0 3.0 2.7 7.4 9.0 8.5

Linde AG 39.0 1.8 4.3 8.3 12.9 3.2 0.6 1.0 2.8 19.9 19.8 19.3 2.1 2.1 2.1 10.8 9.5 9.4


Japan 0.0

Sumitomo Chemical 6.2 4.1 -2.0 32.9 1.3 -1.8 -0.6 12.9 -15.0 NA - 18.8 1.3 1.4 1.1 9.8 10.8 8.4

Shin-Etsu Chemical 25.7 0.9 4.4 -1.4 15.8 -4.8 5.8 -16.2 -2.8 25.4 23.2 21.5 1.7 1.7 1.5 8.3 8.4 7.7

Tosoh 2.8 8.7 4.4 52.6 18.1 2.6 5.8 29.6 -0.9 39.4 18.4 10.5 1.7 1.6 1.3 8.3 8.8 7.4

Mitsui Chemicals 2.6 6.5 4.0 27.2 1.7 0.5 5.3 8.0 -14.6 - - - 0.7 0.7 0.7 9.2 16.1 11.4


Other Asia

Reliance Industries 57.2 -1.3 26.1 30.8 6.5 -5.5 3.4 -0.4 -6.0 16.7 16.2 14.9 2.0 1.8 1.7 11.7 12.5 11.8

Far Eastern New Century Corp 5.3 -1.0 -5.5 1.8 -3.8 -4.3 -14.6 -12.2 -8.7 16.5 20.5 17.6 1.4 1.5 1.4 127.0 13.7 12.9

Formosa Chemicals & Fibre 14.2 2.5 -12.3 9.9 -7.4 -1.0 -20.8 -5.2 -12.2 63.9 16.9 19.2 1.9 1.7 1.6 35.2 15.4 -

Formosa Plastics 16.2 0.0 -2.3 16.0 -5.0 -3.4 -11.7 0.0 -9.9 33.3 23.2 19.4 2.2 2.0 1.9 33.4 25.7 29.3

Nan Ya Plastics 18.1 4.6 -0.6 18.3 -1.2 1.0 -10.2 2.0 -6.2 157.5 22.3 18.2 2.2 2.0 1.9 40.7 30.6 24.8

Oriental Union Chemical 0.9 3.9 -4.7 6.4 -4.3 0.4 -13.9 -8.2 -9.2 24.8 21.3 21.2 1.7 1.6 1.5 14.6 - -Average 28.8 23.2 18.0 2.0 1.9 1.7 18.8 13.3 11.0

PE P/BV EV/EBIDTA

Source: Bloomberg

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