RELIANCE POWER 2017-18 Annual Report Analysis

Sat, 31 Mar

RELIANCE POWER 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 POWER Income Statement Analysis

• Operating income during the year fell 5.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 2.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 47.1% in FY18 as against 43.3% in FY17.
• Depreciation charges increased by 3.4% and finance costs increased by 2.9% YoY, respectively.
• Other income declined by 42.9% YoY.
• Net profit for the year declined by 6.3% YoY.
• Net profit margins during the year declined from 10.6% in FY17 to 10.5% in FY18.

RELIANCE POWER Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	103,957	98,398	-5.3%
Other income	Rs m	4,960	2,831	-42.9%
Total Revenues	Rs m	108,917	101,229	-7.1%
Gross profit	Rs m	45,065	46,331	2.8%
Depreciation	Rs m	7,340	7,588	3.4%
Interest	Rs m	28,431	29,260	2.9%
Profit before tax	Rs m	14,254	12,313	-13.6%
Tax	Rs m	3,213	1,965	-38.8%
Profit after tax	Rs m	11,042	10,348	-6.3%
Gross profit margin	%	43.3	47.1
Effective tax rate	%	22.5	16.0
Net profit margin	%	10.6	10.5

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RELIANCE POWER Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 132 billion as compared to Rs 128 billion in FY17, thereby witnessing an increase of 3.0%.
• Long-term debt down at Rs 242 billion as compared to Rs 263 billion during FY17, a fall of 7.9%.
• Current assets rose 1% and stood at Rs 103 billion, while fixed assets fell 1% and stood at Rs 541 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 644 billion as against Rs 651 billion during FY17, thereby witnessing a fall of 1%.

RELIANCE POWER Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	214,089	224,902	5.1
Current Liabilities	Rs m	128,358	132,271	3.0
Long-term Debt	Rs m	262,900	242,012	-7.9
Total Liabilities	Rs m	650,871	643,837	-1.1
Current assets	Rs m	102,037	103,231	1.2
Fixed Assets	Rs m	548,835	540,606	-1.5
Total Assets	Rs m	650,871	643,837	-1.1

RELIANCE POWER Cash Flow Statement Analysis

• RELIANCE POWER's cash flow from operating activities (CFO) during FY18 stood at Rs 44 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 4 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -43 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 4 billion from the Rs -8 billion net cash flows seen during FY17.

RELIANCE POWER 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	47,054	43,647	-7.2%
Cash Flow from Investing Activities	Rs m	-21,419	3,543	-
Cash Flow from Financing Activities	Rs m	-33,893	-43,109	-
Net Cash Flow	Rs m	-8,258	4,081	-

Current Valuations for RELIANCE POWER

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 3.7, an decline from the EPS of Rs 3.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 36.2, stands at 14.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.5 times, while the price to sales ratio stands at 1.0 times.
• The company's price to cash flow (P/CF) ratio stood at 7.8 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	37.1	35.1
TTM Earnings per share	Rs	3.9	3.7
Diluted earnings per share	Rs	3.2	3.0
Price to Cash Flow	x	8.9	7.8
TTM P/E ratio	x	14.8	14.0
Price / Book Value ratio	x	0.6	0.6
Market Cap	Rs m	132,753	140,046
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for RELIANCE POWER

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY18, from 0.8x 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 1.4x during FY18, from 1.5x 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 4.6% during FY18, from 5.2% 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 8.9% during FY18, from 8.9% 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 6.2% during FY18, from 6.1% 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	0.8	0.8
Debtors’ Days	Days	1,049	1,378
Interest coverage	x	1.5	1.4
Debt to equity ratio	x	1.2	1.1
Return on assets	%	6.1	6.2
Return on equity	%	5.2	4.6
Return on capital employed	%	8.9	8.9

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

RELIANCE POWER Share Price Performance

Over the last one year, RELIANCE POWER share price has moved down from Rs 48.0 to Rs 36.2, registering a loss of Rs 11.9 or around 24.7%.

Meanwhile, the S&P BSE POWER Index is trading at Rs 2,125.8 (down 1.1%). Over the last one year it has moved down from 2,274.4 to 2,125.8, a loss of 149 points (down 6.5%).

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

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

Read: Latest Annual Report Analysis of RELIANCE POWER