X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
RIL: Petering pricing power - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 3, 2002

    RIL: Petering pricing power

    The business environment for petrochemical producers, especially downstream synthetic manufacturers, remains challenging. Reliance Industries Ltd. (RIL) recently announced product prices for the month of January '02, which indicated that pricing power in the industry continues to remain weak.

    While product prices have been declining through the year, much of the weakness seems to have set-in the third quarter of the current fiscal. The drop in prices, YoY, across the board gives an indication of the vulnerability in product pricing. Month on month (MoM), polyester prices continued to slide but some amount of stability seems to have entered polymer markets. December '01 was the worst month in terms of pricing power with the company slashing prices across the board, which could be to revive demand and respond to competitive pressure.

      MoM YoY
    POY -3.9% -13.2%
    PSF -4.6% -18.1%
    PTA 0.0% -18.5%
    MEG -3.8% -24.2%
    PE 0.0% -14.2%
    PP 0.0% -8.9%
    PVC 3.3% -20.0%
    PET 0.0% -1.8%
    LAB 0.0% 0.0%
    Jan '02 prices
    Business environment remains weak with a marked slowdown in domestic and global economic growth. Cumulative exports for the first six months of the current fiscal have declined in every month. Textiles constitute the third largest share of India's exports basket. Readymade garment exports, a component of textiles, is reportedly most affected. Also, synthetic textile exports, for the first five months of FY02, have reportedly declined by 5% YoY. The weakness in demand and increased competition has put pressure on pricing. Adding to the challenges, is the bumper cotton crop this fiscal. With softer cotton prices, synthetic textiles prices have been kept under check.

    While MoM polymer prices have exhibited some stability, realisations YoY have reported a similar performance to polyesters. This could be due to increased competitive pressure in the industry with Haldia Petrochemicals Ltd. commissioning operations over the last 12-18 months and subsequently ramping up operating rates.

    That said, petrochemical producers are likely to have experienced some amount of respite in operating margins, as naphtha prices have softened with weakness in the oil markets. But the decline in feedstock and product prices is not commensurate. Also, oil and naphtha prices have started firming up with the Organisation of Petroleum Exporting Countries (OPEC) cutting production by 1.5 m barrels/day (mbd).

    At Rs 303.6 the stock trades on a multiple of 12.1x 1HFY02 annualised earnings. As feedstock prices increase, prevention in margin erosion is likely to depend on a turnaround in demand, which could instill pricing power.

     

     

    Equitymaster requests your view! Post a comment on "RIL: Petering pricing power ". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    RELIANCE IND. SHARE PRICE


    Aug 23, 2017 03:36 PM

    TRACK RELIANCE IND.

    • Track your investment in RELIANCE IND. with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    RELIANCE IND. 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE RELIANCE IND. WITH

    MARKET STATS