Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Stocks

Reliance Dec 2013 Results in Charts

Share:

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

image

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

image

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

image

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

Refining Margin at $7.8

image

Petrochem Output Flat, Demand Slow

image

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.

image

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

image

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!

image

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.

divider

Subscribe to Capital Mind:

To subscribe to new posts by email, once a day, delivered to your Inbox:

[wysija_form id=”1″]

 

Also, do check out Capital Mind Premium, where we provide high
quality analysis on macro, fixed income and stocks. Also see our
portfolio which has given stellar returns in our year, trade by trade
as we progress. Take a 30-day trial:

[wysija_form id=”2″]

Share:

Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial