Reliance Dec 2013 Results in Charts

9 comments Written on January 21st, 2014 by
Categories: Reliance, Results

Reliance has declared results and here’s a quick summary of what happened in one of India’s largest companies.

Revenues and Profit Flat QoQ, Hardly Any Growth

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We’ve seen about 10% revenue growth from the previous year, but profits have remained flat at Rs. 5,500 cr. for the quarter. This has been flatlining since Sep 2012.

EPS Growth at 0.6%, Trailing Twelve Month EPS Reverses Trend

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Earnings per share has been flat at Rs. 68 per share. The upward trend in the Trailing Twelve Month (TTM) EPS which was due to the dip in Reliance’s profit in 2011-12 is now losing that window and has reversed its upward trend, moving down to 12.5%.

At Rs. 870 per share, Reliance has a P/E of 12.8. This is not too low, but not as high as some of the other companies in the Nifty. Justificably so, because this is now a commodity company.

Oil and Gas: Tapering production, Panna-Mukta Shows Small Uptrend

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Down and to the right. Even the Panna-Mukta production increase is hardly anything to write about.

Refining Margin at $7.8

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Petrochem Output Flat, Demand Slow

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They say:

RIL’s 3QFY14 Petrochemical EBIT declined 15.2% Q-o-Q to ` 2,124 crore impacted by poor domestic demand for polymers and polyester, sequential decline in regional deltas for key products – PP, PVC and fibre intermediates.

 

Cash Comes Down, So Does Debt

They’ve got a truckload of cash, more than 88,000 cr. And then they have 81,000 cr. of debt.

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If Reliance tried to retire its debt through the cash, all banks would fall at their feet, because they are one of the best debt customers and will skew bank ratios tremendously! But that’s probably not the reason it keeps cash - the cash needs to be used in the new investments it will make.

Overall Segments

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This doesn’t inspire a lot of confidence. Revenue growth has been there in the Petrochem business only, and the profits there are flat.

Retail Does Well, Jio is not yet living

The Retail format is doing well, supposedly, with 38% turnover growth at Rs. 3927 cr. Profit before taxes for that segment is at Rs. 271 cr. for the first nine months, but they haven’t mentioned the profits of the previous year (presumably because they didn’t have any).

The Jio Infocomm business has the pan-India Broadband access and a unified telecom licence but nothing’s happening yet. They have a lot of employees, and a lot of tie ups with Reliance Communications and Bharti Airtel, but we have yet to see this business work out for the diversified giant.

Should I Buy?

I always get this question. The answer is: I don’t know.

I had bought some of this stock but before the results I decided to sell. No real reason other than that there is better money to be made elsewhere!

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It really hasn’t gone anywhere in three years, and even after a Rs. 3900 cr. buyback the stock remains stagnant.

I’d focus on the midcaps where there is a lot more growth. But sentiment in Reliance can change dramatically if the Jio Infocomm business takes off.

Also, there are a few pending cases by SEBI, and the focus is on them about Oil and Gas (that they have tried to raise gas prices in government contracts and therefore are holding back on producing gas). But gas prices will be increased in April and if that isn’t shot down by a new government, Reliance’s old oil-and-gas bet might finally see some good returns. Overall, it’s a stock I would keep in a non-aggressive portfolio; but in my head, equity bets need to be aggressive for the small investor.

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http://www.capitalmind.in
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

9 comments “Reliance Dec 2013 Results in Charts”

That KGD-6 Cruve is nice, Deepak, but I believe statistics sometimes give wrong data, or you need to read between the lines.
Hmmm! How can you earn 1.5Lakh Crore with a single signature? Without Sweat!
You seem not to bother about the acusations of Ex-CM Delhi, or just ignoring the fact that the present LG of Delhi was a Joint Secretary in the Misinstry of Petroleum, that he had a brief sting in RIL, before he got back.
I read somewhere that the Ambanis met him yesterday on a courtesy call!
Moily denies, ofcourse of any foul play, but I am expecting some facts from you. Or you don’t like to get involved in POLITICS?

I honestly don’t care about the ex-CM of Delhi’s allegations without proof (I read through the PIL and the whole thing, and it’s all bullshit. Very sad, because there should be better evidence collection)

Just because someone worked with RIL or got a courtesy call from the Ambanis doesn’t make the LG liable for anything. He never pulled down the government – Mr. Kejriwal himself resigned.

There are no facts from me on this because there is nothing I know that is useful in this debate. The political angle isn’t interesting to this blog beyond the economic impact :)

Oh ! Come on! Please do not rush to conclusions!
Just a matter of Economic Impact it is I am interested!
The ONGC was supplying it at $1.2 per mmBTU and RIL priced it $2.4 per mmBTU and then the present First Citizen and the then FM, Da, fixed the issue between NTPC and RIL for $4.2 per mmBTU, and remember, there was no production of a single unit of gas thus far. Mr.Jairam Ramesh, Mr.Jaipal Reddy, and one more Minister was either sacked or shifted to other portfolio, and Murali Deora tried something and finally Mr. Moily got for $8.4 per mmBTU and we are talking about an LOI Signed by RIL to NTPC for suppy of 132 triion Units per annum and I repeat per annum, and until Decemebr2013, the Production got down and all of a sudden, after the atest agreement, it rose again!
Say at the existing rate, how much is the price of 132 Trillion Units per annum? This is for 17 long years!
You don’t seem to be interested in bigger volumes. Do you?

Oh on the gas pricing front, of course, there has been issues. It seems no price for the gas has been fixed in the initial agreement. $4.2 is the government’s own pricing, not Ambani’s. The $2.34 wasn’t agreed upon (no doc was signed). The government should have signed on a price or essentially said that market price would be used for the sales, both of which were absent.

Of course production will go down if prices diverge. Last year coal india said there was a shortage of coal. COal prices were determined in April at about 20% less than international prices. So, they would rather keep coal in the ground than have to dig it out and sell at low prices! They will produce about 5-6% less this year. Coal India is also making obscene profits.

It’s unfair but reliance will simply not produce any reasonable amount of gas unless the prices are hiked. The government should either cancel the contract for non performance, or hike prices. I feel sad the government chose the latter.

132 trillion units = 132 million mmBTU. which at $8 is $1 billion per year, or Rs. 6,000 cr. which while not insignificant is not a big % of reliance annual numbers, no?

Rs6,000 Cr per annum on Present value basis for 17 years , simply multiplies to Rs1,02,000 Crores, so the allegation was a bit close, but its Future value would be more than 3,00,000 Crores….. any suggestions?

Ya, it is not big % of Reliance Numbers, that is why there is RPWOER, a company floated without any power production, a Telecom company that cheated the Public, a PetroChemical Chain that went dead after acquiring lakhs of acres of land across the country, a Jio now….. Capitalism my friend!
But your comparision of CIL with RIL is not apt! CIL is a Public Sector Company , while RIL is a Private Organization! Yes, the government should have signed, but not. Red tapism or favorism?The ONGC should have taken the job directly, instead of going for outsourcing. The gas Block might be named after D, but the gas is the property of the Indian Government!
By the way, RIL wanted to take Kejriwal to Court, filing a defamation…. did they?…….Anyway, you are not interested in Politics……

I disagree that CIL is not a correct comparison. Private or public, they are all to be evaluated the same way. We should not have any public sector industry in this country, leave alone a monopoly like CIL. The government should get a royalty on the price of coal sold, with increasing royalties as prices go higher.

RIL’s revenues of 6,000 cr. a year are not a big deal. Because its contract with NTPC can be broken by NTPC at any time, and the LOI is just that, an LOI. There is no delivery contract for gas signed at all, and if so, they should have agreed on a price, and if not, it is NTPCs fault, not Reliances. You can’t expect people to keep saying that Reliance “influenced” things, because in the end the responsibility is that of the NTPC management. That is why we should jail bankers for giving bad loans without checking background properly, but we still want to only nail promoters. I’m quite fond of capitalism and while there are things where Reliance has skirted fences, I believe that every legitimate thing they do should be allowed.

RIL and Ambani shy away from direct politics, and I don’t care if RIL files a defamation case. All I know is that Kejriwal is totally useless and just tries to use sensationalism without doing anything. Even his blaming of RIL had no proof whatsoever, just random statements that are circumstantial and not holdable in court. If they focus on doing things that are valid in court, we can actually see a conviction, but they don’t! It’s just silly.

Btw, the concept of FV means 102,000 paid over multiple years has a PV of lesser than that today, mathematically speaking.

How come the Production graph shifted all of a sudden after December?(You can draw nice charts) How come the rate was doubled and on what basis? !

Economic impact? let me see!
Reliance had GPA(Gas Purchase Agreements) with several companies that built Gas Power Projects, which in turn has Power Purchase Agreements with local State governments. GE supplied a number of Gas Turbines to all these companies, and they lie inert, except on a few MW of power from their Steam turbines. majority of GE Turbines are running on CCGTs, that is Combined Cycle Gas Turbines, where Power being produced from Two Sources, Steam and Gas. But No Gas so far ! It is not just NTPC, many other Private players are still being lured by GE, to get their business done, but NO GAS!


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