X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 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: Under pressure - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

RIL: Under pressure

Apr 23, 2002

Reliance Industries Ltd. (RIL), the petrochemical major, is set to declare results today along with its refining subsidiary Reliance Petroleum Ltd. (RPL). The companies are likely to declare separate results. The merger between the two companies is still pending High Court approval.

(Rs m) FY01 FY02E Change
Net sales 254,290 215,574 -15.2%
Other Income 3,830 6,751 76.3%
Expenditure 202,500 169,962 -16.1%
Operating Profit (EBDIT) 51,790 45,611 -11.9%
Operating Profit Margin (%) 20.4%21.2% 
Interest 12,160 9,628 -20.8%
Depreciation 15,650 17,320 10.7%
Profit before Tax 27,810 25,414 -8.6%
Extraordinary items - 3,580  
Tax 1,350 1,273 -5.7%
Profit after Tax/(Loss) 26,460 27,721 4.8%
Net profit margin (%) 10.4%12.9% 
No. of Shares 1,054 1,054  
Diluted Earnings per share 25.1 22.9  
P/E Ratio 13.7 12.8  

FY02 has been a tough year for RIL. The company was faced with lower realisations. Commodity prices were hit, as brakes were applied on global economic growth rates. The weakened domestic economy, which accounts for approximately 85% of sales, led to lower demand. Feedstock prices continued to remain volatile, especially in the second half of the fiscal. However, we believe, that compared to the previous fiscal (FY01) feedstock prices are likely to be lower, which could support operating margins. Adding to the woes was increased competition, which ate into the company's market share. Consequently, revenues of RIL are likely to manifest these strains.

The company has been reducing interest cost over the past four quarters. This is likely to be through improved efficiency in working capital, refinancing of high cost debt and repayment of loans. The lower operating profit is likely to take toll on pre-tax profits, despite higher other income and lower interest costs. However, post tax profits has been lifted by extraordinary items, which pertain to sale of L&T stake to Grasim. Adjusting for other income, profits were likely to be lower by 9%.

At Rs 294 the scrip is trading on a multiple of 12.8x FY02E earnings. Over the past year, valuations of the company have retracked due to the difficult business environment. Going forward, valuations could continue to be under pressure from project risks, as the merged entity is likely to pass through a phase of heavy capital expenditure.


Equitymaster requests your view! Post a comment on " RIL: Under pressure ". Click here!

  

More Views on News

RELIANCE IND. 2018-19 Annual Report Analysis (Annual Result Update)

Jul 25, 2019 | Updated on Jul 25, 2019

Here's an analysis of the annual report of RELIANCE IND. for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of RELIANCE IND.. Also includes updates on the valuation of RELIANCE IND..

RELIANCE IND. Announces Quarterly Results (1QFY20); Net Profit Up 6.8% (Quarterly Result Update)

Jul 22, 2019 | Updated on Jul 22, 2019

For the quarter ended June 2019, RELIANCE IND. has posted a net profit of Rs 101 bn (up 6.8% YoY). Sales on the other hand came in at Rs 1,613 bn (up 21.3% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.

RELIANCE IND. Announces Quarterly Results (4QFY19); Net Profit Up 9.5% (Quarterly Result Update)

Apr 22, 2019 | Updated on Apr 22, 2019

For the quarter ended March 2019, RELIANCE IND. has posted a net profit of Rs 104 bn (up 9.5% YoY). Sales on the other hand came in at Rs 1,416 bn (up 17.9% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.

RELIANCE IND. 2017-18 Annual Report Analysis (Annual Result Update)

Nov 28, 2018 | Updated on Nov 28, 2018

Here's an analysis of the annual report of RELIANCE IND. for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of RELIANCE IND.. Also includes updates on the valuation of RELIANCE IND..

More Views on News

Most Popular

My Top 3 Dividend Millionaire Stocks (Profit Hunter)

Aug 7, 2019

As markets continue to rattle amid earning season, upcoming elections, volatile crude price and US China trade war, it's a great idea to add some stability to your portfolio by adding dividend stocks.

The Perfect Stock in the Rebirth of India (The 5 Minute Wrapup)

Aug 8, 2019

This debt-free, well-managed company is all set to soar.

This 60-Year Old Smallcap Company Could Be Our Next Recommendation (The 5 Minute Wrapup)

Aug 12, 2019

My experience at the recent AGM of this smallcap company which has financials of any FMCG major.

Super investor Pulak Prasad is Buying Stocks Big Time...and You Should Too (The 5 Minute Wrapup)

Aug 9, 2019

Here's why the relentless correction in the Indian stock markets has not unnerved the big investors.

Qatar is Rearing Cows...this is Good News for India

Aug 9, 2019

Qatar has turned around after the Saudi embargo. This is good news for India.

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

RELIANCE IND. SHARE PRICE


Aug 19, 2019 (Close)

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. 5-YR ANALYSIS

COMPARE RELIANCE IND. WITH

MARKET STATS