RELIANCE COMMUNICATIONS 2017-18 Annual Report Analysis

Sat, 31 Mar

RELIANCE COMMUNICATIONS has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

RELIANCE COMMUNICATIONS Income Statement Analysis

• Operating income during the year fell 29.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1689.8% YoY during the fiscal. Operating profit margins witnessed a growth and stood at 544.4% in FY18 as against 21.3% in FY17.
• Depreciation charges decreased by 12.2% and finance costs decreased by 27.1% YoY, respectively.
• Other income grew by 9.6% YoY.
• Net profit for the year grew by 1759.4% YoY.
• Net profit margins during the year declined from 19.6% in FY17 to 520.6% in FY18.

RELIANCE COMMUNICATIONS Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	65,540	45,930	-29.9%
Other income	Rs m	830	910	9.6%
Total Revenues	Rs m	66,370	46,840	-29.4%
Gross profit	Rs m	-13,970	-250,030	1,689.8%
Depreciation	Rs m	8,210	7,210	-12.2%
Interest	Rs m	2,550	1,860	-27.1%
Profit before tax	Rs m	-23,900	-258,190	980.3%
Tax	Rs m	-11,040	-19,070	72.7%
Profit after tax	Rs m	-12,860	-239,120	1,759.4%
Gross profit margin	%	-21.3	-544.4
Effective tax rate	%	46.2	7.4
Net profit margin	%	-19.6	-520.6

RELIANCE COMMUNICATIONS Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 525 billion as compared to Rs 360 billion in FY17, thereby witnessing an increase of 45.6%.
• Long-term debt down at Rs 130 billion as compared to Rs 226 billion during FY17, a fall of 42.3%.
• Current assets rose 249% and stood at Rs 455 billion, while fixed assets fell 69% and stood at Rs 255 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 710 billion as against Rs 961 billion during FY17, thereby witnessing a fall of 26%.

RELIANCE COMMUNICATIONS Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	285,690	27,830	-90.3
Current Liabilities	Rs m	360,340	524,780	45.6
Long-term Debt	Rs m	225,500	130,210	-42.3
Total Liabilities	Rs m	960,610	710,040	-26.1
Current assets	Rs m	130,070	454,590	249.5
Fixed Assets	Rs m	830,540	255,450	-69.2
Total Assets	Rs m	960,610	710,040	-26.1

RELIANCE COMMUNICATIONS Cash Flow Statement Analysis

• RELIANCE COMMUNICATIONS's cash flow from operating activities (CFO) during FY18 stood at Rs 10 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -9 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -2 billion from the Rs 3 billion net cash flows seen during FY17.

RELIANCE COMMUNICATIONS Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	-3,880	9,640	-
Cash Flow from Investing Activities	Rs m	8,120	-2,680	-
Cash Flow from Financing Activities	Rs m	-1,730	-9,040	-
Net Cash Flow	Rs m	2,510	-2,080	-

Current Valuations for RELIANCE COMMUNICATIONS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -86.5, an decline from the EPS of Rs -5.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 21.8, stands at -1.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.2 times, while the price to sales ratio stands at 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at -0.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	26.3	16.6
TTM Earnings per share	Rs	-5.2	-86.5
Diluted earnings per share	Rs	-4.7	-86.5
Price to Cash Flow	x	-22.8	-0.3
TTM P/E ratio	x	-7.8	-1.5
Price / Book Value ratio	x	0.4	2.6
Market Cap	Rs m	113,373	71,033
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for RELIANCE COMMUNICATIONS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.9x during FY18, from 0.4x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at -137.8x during FY18, from -8.4x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at -859.2% during FY18, from -4.5% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at -162.2% during FY18, from -4.2% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at -33.4% during FY18, from -1.1% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	0.4	0.9
Debtors’ Days	Days	18	17
Interest coverage	x	-8.4	-137.8
Debt to equity ratio	x	0.8	4.7
Return on assets	%	-1.1	-33.4
Return on equity	%	-4.5	-859.2
Return on capital employed	%	-4.2	-162.2

To see how RELIANCE COMMUNICATIONS has performed over the last 5 years, please visit here.

RELIANCE COMMUNICATIONS Share Price Performance

Over the last one year, RELIANCE COMMUNICATIONS share price has moved down from Rs 38.3 to Rs 21.8, registering a loss of Rs 16.6 or around 43.2%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 6,513.3 (down 0.7%). Over the last one year it has moved up from 5,771.5 to 6,513.3, a gain of 742 points (up 12.9%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for RELIANCE COMMUNICATIONS and quarterly results for RELIANCE COMMUNICATIONS)

Read: Latest Annual Report Analysis of RELIANCE COMMUNICATIONS