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.
Reliance net down 17% in 4Q - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Apr 30, 2001

    Reliance net down 17% in 4Q

    The Indian conglomerate, Reliance Industries Ltd., has declared its annual results. The company reported a strong financial performance led by commissiong of its Jamanagar complex. The sales and profits are the largest in the private sector.

    (Rs m) 4QFY00 4QFY01 Change FY00 FY01 Change
    Sales 65,940 64,440 -2.3% 203,010 280,080 38.0%
    Other Income 2,610 1,780 -31.8% 6,870 3,830 -44.3%
    Expenditure 52,620 51,090 -2.9% 162,420 228,290 40.6%
    Operating Profit (EBDIT) 13,320 13,350 0.2% 40,590 51,790 27.6%
    Operating Profit Margin (%) 20.2% 20.7%   20.0% 18.5%  
    Interest 3,090 2,910 -5.8% 10,080 12,160 20.6%
    Depreciation 5,730 5,470 -4.5% 12,780 15,650 22.5%
    Profit before Tax 7,110 6,750 -5.1% 24,600 27,810 13.0%
    Tax 570 1,350   570 1,350  
    Profit after Tax/(Loss) 6,540 5,400 -17.4% 24,030 26,460 10.1%
    Net profit margin (%) 9.9% 8.4%   11.8% 9.4%  
    No. of Shares (eoy) 1,054 1,054   1,054 1,054  
    Diluted Earnings per share* 24.8 20.5   22.8 25.1  
    P/E Ratio   16.7     13.7  

    The turnover of the company has increased substantially. The manufacturing sales increased by 29%, which was driven largely by volumes higher by 19% and realisations up 13%. Merchant sales of the company amounted to Rs 22.8 bn, which represents exports of petroleum products from RPL. The increase in volumes is due to commissioning of the Paraxylene (PX) and Polypropylene (PP) capacity. Better realisations could have been led by focusing on higher value added products. Production increased by 16% to touch 10.4 m tonnes

    However, sales QoQ have declined, which is largely due to the new Jamnagar capacities coming onstream in the last quarter of FY00. Consequently, the effect of new capacities has been nullified in 4QFY01. Also, the company shut down operations temporarily post Gujarat earthquake, contrary to statements made earlier by the company, resulting in revenue loss.

    The growth in operating profit is largely volume driven as the operating environment in the current fiscal was challenging with feedstock prices ballooning. The escalation in oil prices led to the prices of naphtha, the key ingredient, rising significantly; consequently, applying downward pressure on the OPM. Nevertheless, the company has been able to better OPM in the last two quarters of fiscal '01 by approximately 50 basis points. For the year ended March '01 the OPM has declined by 150 basis points. Margins could also have been supported by higher realisations on export sales through rupee depreciation.

    Depreciation is another element of the income statement indicating timing of the Jamanager capacity coming onstream. Depreciation charge for 4QFY00 was considerable higher than charges for the previous quarters. Consequently, depreciation is flat in 4QFY01. However, on aggregate basis for the fiscal ended March '01 the depreciation charge has increased as additional non-cash expense was passed through the income statement. Also, the company changed its depreciation policy from straight line method (SLM) to written down value (WDV) resulting in in higher provisioning of Rs 1.6 bn.

    Pre-tax profit growth has remained subdued as compared to operating profits as other income declined substantially. The company repatriated foreign currency monetary assets amounting to Rs 38.6 bn leading to lower interest earnings and Rupee depreciation benefits. Also, interest bearing, optionally fully convertible debentures of RPL were converted into equity.

    Post tax profits have been impacted by effective tax rate for FY01 doubling YoY. This is because the company falls under the minimum alternative tax (MAT) provisions.

    At Rs 343 the company trades on a multiple of 16.7x 4QFY01 annualised earnings and 13.7x on full year earnings. Historically, the three year average P/E ratio is 13x.



    Equitymaster requests your view! Post a comment on "Reliance net down 17% in 4Q". Click here!


    More Views on News

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

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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


    Aug 18, 2017 (Close)


    • 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


    Compare Company With Charts