RELIANCE IND. 2019-20 Annual Report Analysis

Tue, 31 Mar

RELIANCE IND. has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

RELIANCE IND. Income Statement Analysis

• Operating income during the year rose 4.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 0.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 15.8% in FY20 as against 16.4% in FY19.
• Depreciation charges increased by 6.1% and finance costs increased by 33.5% YoY, respectively.
• Other income grew by 58.3% YoY.
• Net profit for the year grew by 0.1% YoY.
• Net profit margins during the year declined from 7.7% in FY19 to 7.4% in FY20.

RELIANCE IND. Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	5,132,060	5,350,730	4.3%
Other income	Rs m	83,860	132,790	58.3%
Total Revenues	Rs m	5,215,920	5,483,520	5.1%
Gross profit	Rs m	841,670	844,500	0.3%
Depreciation	Rs m	209,340	222,030	6.1%
Interest	Rs m	164,950	220,270	33.5%
Profit before tax	Rs m	551,240	534,990	-2.9%
Tax	Rs m	153,900	137,260	-10.8%
Profit after tax	Rs m	397,340	397,730	0.1%
Gross profit margin	%	16.4	15.8
Effective tax rate	%	27.9	25.7
Net profit margin	%	7.7	7.4

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RELIANCE IND. Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 4,129 billion as compared to Rs 3,173 billion in FY19, thereby witnessing an increase of 30.1%.
• Long-term debt down at Rs 1,976 billion as compared to Rs 2,075 billion during FY19, a fall of 4.8%.
• Current assets rose 11% and stood at Rs 2,583 billion, while fixed assets rose 18% and stood at Rs 9,048 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 11,630 billion as against Rs 9,976 billion during FY19, thereby witnessing a growth of 17%.

RELIANCE IND. Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	3,871,030	4,491,470	16.0
Current Liabilities	Rs m	3,173,220	4,129,160	30.1
Long-term Debt	Rs m	2,075,060	1,976,310	-4.8
Total Liabilities	Rs m	9,976,300	11,630,150	16.6
Current assets	Rs m	2,320,530	2,582,600	11.3
Fixed Assets	Rs m	7,655,770	9,047,550	18.2
Total Assets	Rs m	9,976,300	11,630,150	16.6

RELIANCE IND. Cash Flow Statement Analysis

• RELIANCE IND.'s cash flow from operating activities (CFO) during FY20 stood at Rs 949 billion, an improvement of 124.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -725 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -25 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs 198 billion from the Rs 37 billion net cash flows seen during FY19.

RELIANCE IND. Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	423,460	948,770	124.1%
Cash Flow from Investing Activities	Rs m	-951,280	-725,200	-
Cash Flow from Financing Activities	Rs m	559,060	-25,410	-
Net Cash Flow	Rs m	37,450	198,390	429.7%

Current Valuations for RELIANCE IND.

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 62.7, an decline from the EPS of Rs 67.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,112.5, stands at 18.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.7 times, while the price to sales ratio stands at 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at 12.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	866.0	844.1
TTM Earnings per share	Rs	67.1	62.7
Diluted earnings per share	Rs	58.7	58.8
Price to Cash Flow	x	15.2	12.8
TTM P/E ratio	x	23.2	18.9
Price / Book Value ratio	x	1.7	1.8
Market Cap	Rs m	6,733,861	7,903,482
Dividends per share (Unadj.)	Rs	6.5	6.5

Ratio Analysis for RELIANCE IND.

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.6x during FY20, from 0.7x during FY19. 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 3.4x during FY20, from 4.3x during FY19. 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 8.9% during FY20, from 10.3% during FY20. 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 11.7% during FY20, from 12.0% during FY19. 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 5.3% during FY20, from 5.6% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	0.7	0.6
Debtors’ Days	Days	2	1
Interest coverage	x	4.3	3.4
Debt to equity ratio	x	0.5	0.4
Return on assets	%	5.6	5.3
Return on equity	%	10.3	8.9
Return on capital employed	%	12.0	11.7

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 1,363.1 to Rs 1,112.5, registering a loss of Rs 250.6 or around 18.4%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 10,020.9 (up 8.7%). Over the last one year it has moved down from 15,269.7 to 10,020.9, a loss of 5,249 points (down 34.4%).

Overall, the S&P BSE SENSEX is down 24.2% 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.