RELIANCE IND. 2017-18 Annual Report Analysis

Sat, 31 Mar

RELIANCE IND. 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 IND. Income Statement Analysis

• Operating income during the year rose 25.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 38.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 18.2% in FY18 as against 16.5% in FY17.
• Depreciation charges increased by 43.4% and finance costs increased by 109.2% YoY, respectively.
• Other income grew by 5.4% YoY.
• Net profit for the year grew by 20.3% YoY.
• Net profit margins during the year declined from 10.7% in FY17 to 10.2% in FY18.

RELIANCE IND. Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	2,805,840	3,526,230	25.7%
Other income	Rs m	94,430	99,490	5.4%
Total Revenues	Rs m	2,900,270	3,625,720	25.0%
Gross profit	Rs m	461,940	641,760	38.9%
Depreciation	Rs m	116,460	167,060	43.4%
Interest	Rs m	38,490	80,520	109.2%
Profit before tax	Rs m	401,420	493,670	23.0%
Tax	Rs m	102,010	133,460	30.8%
Profit after tax	Rs m	299,410	360,210	20.3%
Gross profit margin	%	16.5	18.2
Effective tax rate	%	25.4	27.0
Net profit margin	%	10.7	10.2

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RELIANCE IND. Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 3,139 billion as compared to Rs 2,353 billion in FY17, thereby witnessing an increase of 33.4%.
• Long-term debt down at Rs 1,442 billion as compared to Rs 1,521 billion during FY17, a fall of 5.2%.
• Current assets rose 25% and stood at Rs 1,838 billion, while fixed assets rose 12% and stood at Rs 6,275 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 8,113 billion as against Rs 7,068 billion during FY17, thereby witnessing a growth of 15%.

RELIANCE IND. Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	2,636,890	2,934,790	11.3
Current Liabilities	Rs m	2,353,150	3,138,520	33.4
Long-term Debt	Rs m	1,521,480	1,441,750	-5.2
Total Liabilities	Rs m	7,068,020	8,112,730	14.8
Current assets	Rs m	1,468,130	1,837,860	25.2
Fixed Assets	Rs m	5,599,890	6,274,870	12.1
Total Assets	Rs m	7,068,020	8,112,730	14.8

RELIANCE IND. Cash Flow Statement Analysis

• RELIANCE IND.'s cash flow from operating activities (CFO) during FY18 stood at Rs 715 billion, an improvement of 44.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -683 billion, an improvement of 3.0% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -20 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 13 billion from the Rs -80 billion net cash flows seen during FY17.

RELIANCE IND. 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	495,500	714,590	44.2%
Cash Flow from Investing Activities	Rs m	-662,920	-682,900	-
Cash Flow from Financing Activities	Rs m	86,170	-20,010	-
Net Cash Flow	Rs m	-80,340	12,660	-

Current Valuations for RELIANCE IND.

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 60.8, an decline from the EPS of Rs 101.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 882.8, stands at 17.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.0 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 13.7 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	948.3	595.5
TTM Earnings per share	Rs	101.2	60.8
Diluted earnings per share	Rs	44.3	53.2
Price to Cash Flow	x	21.5	13.7
TTM P/E ratio	x	29.9	17.1
Price / Book Value ratio	x	1.3	2.5
Market Cap	Rs m	3,346,100	7,239,433
Dividends per share (Unadj.)	Rs	11.0	6.0

Ratio Analysis for RELIANCE IND.

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.6x during FY18, from 0.6x 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 7.1x during FY18, from 11.4x 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 improved and stood at 12.3% during FY18, from 11.4% 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 improved and stood at 13.1% during FY18, from 10.6% 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 improved and stood at 5.4% during FY18, from 4.8% 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	0.6	0.6
Debtors’ Days	Days	1	2
Interest coverage	x	11.4	7.1
Debt to equity ratio	x	0.6	0.5
Return on assets	%	4.8	5.4
Return on equity	%	11.4	12.3
Return on capital employed	%	10.6	13.1

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

RELIANCE IND. Share Price Performance

Over the last one year, RELIANCE IND. share price has moved down from Rs 1,319.2 to Rs 882.8, registering a loss of Rs 436.4 or around 33.1%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 14,614.4 (up 0.1%). Over the last one year it has moved up from 13,563.6 to 14,614.4, a gain of 1,051 points (up 7.7%).

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

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

Read: Latest Annual Report Analysis of RELIANCE IND.