RIL: Consolidated numbers disappoint - 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: Consolidated numbers disappoint

Oct 9, 2002

The integrated petrochemical major, Reliance Industries (RIL), recently declared audited financial results for the year ended March '02. Post announcement the scrip has declined to Rs 240 levels after having clawed its way to Rs 270 levels in the previous month. The consolidated results have come in below street expectations. At time of unaudited results for FY02, the company declared consolidated profit at Rs 36.8 bn with per share earnings (EPS) at Rs 34.9. Based on these numbers, markets are likely to have expected audited EPS to be in proximity of unaudited figures. Having said that, unaudited consolidated results were based on equity accounting method (%share in performance of subsidiary & associate companies) with Reliance Petroleum being the largest contributor. With merger between RIL and RPL still pending approval from high courts, it was prudent for the company not to pre-empt the courts by declaring merged results, which has contributed to variance in numbers.

UnauditedAudited
(Rs m)Con. FY02Con. FY02Change
Net Sales 177,520 420,960 137.1%
Other Income 4,750 8,320 75.2%
Expenditure 130,380 342,310 162.5%
Operating Profit (EBDIT) 47,140 78,650 66.8%
Operating Profit Margin (%)26.6%18.7%
Interest 9,340 18,280 95.7%
Depreciation 17,350 28,160 62.3%
Profit before Tax 25,200 40,530 60.8%
Extraordinary items 3,580 4,120 15.1%
Tax 1,780 11,860 566.3%
Income from assc./share of MI 9,780 (10)
Profit after Tax/(Loss) 36,780 32,800 -10.8%
Net profit margin (%)20.7%7.8%
No. of Shares 1,053.8 1,396.4
Diluted Earnings per share* 34.9 23.5
P/E Ratio 6.9 10.3

At time of announcement of merger, based on 9m FY02 annualised results, we had reported a merged EPS of Rs 27.2. On merger, share capital of RIL has increased by 3.4 bn leading to dilution in EPS. Depreciation and tax has increased considerably pulling down consolidated earnings. Further, unaudited results also included associate companies, which have not been accounted for in audited results. Expected vehicle for power sector ventures, BSES -- an associate company -- added to the unaudited bottomline. Exclusion of associate companies from audited results has raised investors' eyebrows.

The RIL scrips tends to trade in a valuation band of 10x-15x earnings. With the petrochemical cycle weakening the outlook for the company in FY03 remains challenging. Trailing 12 month average product prices for October '02 are lower across the board, except for polypropylene (PP) and poly vinyl chloride (PVC). Products prices have been weakening, month-on-month, for the past two months. However, average prices for quarter ended September '02 are higher YoY. Consequently, while volume growth could be subdued, realisations could offer buoyancy in sales for 2QFY03 petrochemical sales. In the refining business, we reckon, product prices YoY to have risen marginally, as crude prices for the concerned period were higher by 6%. But refining margins are likely to be have declined.

International integrated majors, though having substantial oil & gas revenues, tend to trade on valuations between 15x-20x earnings, as diversification across the petroleum chain reduces volatility in earnings. RIL could trade at mid-cycle (petrochemical) valuations. However, with RIL likely to enter a capital intensive phase -- oil & gas exploration & production, roll out of petroleum marketing network, establishing pan-India broad band network and opportunities from privatisation -- and lack of clarity on the same, markets are cautious on the stock. The petrochemical and refining cycle is likely to remain weak for FY03.

Equitymaster requests your view! Post a comment on "RIL: Consolidated numbers disappoint". Click here!

  

More Views on News

RELIANCE IND. Announces Quarterly Results (2QFY21); Net Profit Down 7.1% (Quarterly Result Update)

Nov 4, 2020 | Updated on Nov 4, 2020

For the quarter ended September 2020, RELIANCE IND. has posted a net profit of Rs 105 bn (down 7.1% YoY). Sales on the other hand came in at Rs 1,162 bn (down 23.6% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.

RELIANCE IND. 2019-20 Annual Report Analysis (Annual Result Update)

Aug 5, 2020 | Updated on Aug 5, 2020

Here's an analysis of the annual report of RELIANCE IND. for 2019-20. 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 (1QFY21); Net Profit Up 27.8% (Quarterly Result Update)

Jul 31, 2020 | Updated on Jul 31, 2020

For the quarter ended June 2020, RELIANCE IND. has posted a net profit of Rs 129 bn (up 27.8% YoY). Sales on the other hand came in at Rs 912 bn (down 43.5% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.

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..

More Views on News

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

An India Revival Stock I'm Bullish On... (Profit Hunter)

Apr 9, 2021

This could take India to the position of 3rd largest economy.

Why Did the Market Crash on Monday? (Fast Profits Daily)

Apr 13, 2021

In this video, I'll you what I think is the real reason behind yesterday's market crash.

A Unique Sector for Short-Term Profits (Fast Profits Daily)

Apr 12, 2021

This ignored sector could deliver big short-term profits.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

RELIANCE IND. SHARE PRICE


Apr 16, 2021 (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