Reliance Capital Net Income surged on 34.0% in 2015 while EBITDA Margin decreased slightly on 1.1 pp from 45.2% to 44.1%

29-05-2015 • About Reliance Capital ($RELCAPITAL) • By InTwits

Reliance Capital reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Reliance Capital has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 1.6%.
CAPEX is quite volatile: 920 in FY2015, 1,890 in FY2014, 550 in FY2013, 1,300 in FY2012, 990 in FY2011
The company has potentially unprofitable business model: ROIC is at 3.1%
It operates with high leverage: Net Debt/EBITDA is 6.2x while industry average is 3.1x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Reliance Capital ($RELCAPITAL) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	55,360	66,270	75,190	75,440	89,290	18.4%
EBITDA	18,040	28,230	32,290	34,090	39,410	15.6%
Net Income	2,910	4,580	8,120	7,470	10,010	34.0%
Balance Sheet
Cash	16,340	11,250	15,820	26,630	16,240	-39.0%
Short Term Debt	82,990	76,640	88,240	113,990	94,420	-17.2%
Long Term Debt	120,750	119,260	136,860	141,780	166,970	17.8%
Cash flow
Capex	990	1,300	550	1,890	920	-51.3%
Ratios
Revenue growth	-9.7%	19.7%	13.5%	0.3%	18.4%
EBITDA growth	-10.1%	56.5%	14.4%	5.6%	15.6%
EBITDA Margin	32.6%	42.6%	42.9%	45.2%	44.1%	-1.1%
Net Income Margin	5.3%	6.9%	10.8%	9.9%	11.2%	1.3%
CAPEX, % of revenue	1.8%	2.0%	0.7%	2.5%	1.0%	-1.5%
ROIC	1.1%	1.7%	2.5%	2.3%	3.1%	0.8%
ROE	3.8%	4.7%	6.8%	6.1%	7.8%	1.7%
Net Debt/EBITDA	10.4x	6.5x	6.5x	6.7x	6.2x	-0.5x

Revenue and profitability

Reliance Capital's Revenue jumped on 18.4% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.58 pp from 5.1% to 5.7% in FY2015.

Net Income marign increased slightly on 1.3 pp from 9.9% to 11.2% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Reliance Capital's CAPEX/Revenue was 1.0% in FY2015. CAPEX/Revenue decreased slightly on 0.93 pp from 2.0% in FY2012 to 1.0% in FY2015. It's average CAPEX/Revenue for the last three years was 1.4%.

Return on investment

The company operates at low ROIC (3.13%) and ROE (7.79%). ROIC increased slightly on 0.82 pp from 2.3% to 3.1% in FY2015. ROE increased slightly on 1.7 pp from 6.1% to 7.8% in FY2015.

Leverage (Debt)

Debt level is 6.2x Net Debt / EBITDA and 6.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 6.7x to 6.2x in FY2015. Debt increased on 2.2% in FY2015 while cash dropped on 39.0% in FY2015.

Management team

Soumen Ghosh "Sam" is a Reliance Capital's CEO. Soumen Ghosh "Sam" has spent 3 years at the company.

Appendix 1: Peers in Finance (including NBFCs)

Below you can find Reliance Capital benchmarking vs. other companies in Finance (including NBFCs) industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Fortune Financial Services (India) ($FORTUNEF)		-11.7%	-24.9%	-7.1%	188.4%
Motilal Oswal Financial Services ($MOTILALOFS)		-21.6%	0.4%	-0.9%	64.7%
Sks Microfinance ($SKSMICRO)		-62.8%	-25.6%	55.0%	47.3%
Bajaj Holdings & Investment ($BAJAJHLDNG)		-66.6%	12.7%	23.2%	29.9%
Bajaj Finserv ($BAJAJFINSV)		59.7%	28.1%	18.8%	26.8%
Median (19 companies)	-51.4%	23.5%	26.9%	20.8%	13.3%
Reliance Capital ($RELCAPITAL)		19.7%	13.5%	0.3%	18.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Microse India ($MICROSE)					101.1%
Pnb Gilts ($PNBGILTS)	91.8%	94.0%	96.4%	96.4%	96.1%
Jsw Holdings ($JSWHL)					93.8%
Rural Electrification Corporation ($RECLTD)	97.1%	97.2%	97.3%	96.7%	93.3%
Bajaj Holdings & Investment ($BAJAJHLDNG)	98.7%	96.2%	95.5%	94.4%	92.7%
Median (37 companies)	69.5%	70.0%	67.8%	66.4%	62.4%
Reliance Capital ($RELCAPITAL)	32.6%	42.6%	42.9%	45.2%	44.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Fortune Financial Services (India) ($FORTUNEF)	5.5%	1.0%	1.3%	4.5%	7.3%
Clarus Finance & Securities ($CLARUS)				6.9%	5.8%
Srei Infrastructure Finance ($SREINFRA)	34.8%	29.3%	8.3%	12.6%	5.4%
Motilal Oswal Financial Services ($MOTILALOFS)	10.7%	15.5%	5.3%	1.7%	3.4%
Shriram City Union Finance ($SHRIRAMCIT)	1.3%	1.8%	2.0%	1.0%	1.2%
Median (20 companies)	1.7%	0.6%	0.7%	0.9%	0.7%
Reliance Capital ($RELCAPITAL)	1.8%	2.0%	0.7%	2.5%	1.0%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Motilal Oswal Financial Services ($MOTILALOFS)			12.0%	9.7%	11.9%
Shriram City Union Finance ($SHRIRAMCIT)		6.1%	5.8%	5.8%	5.7%
Mahindra & Mahindra Financial Services ($M&MFIN)	7.3%	6.4%	6.3%	5.3%	4.2%
Rural Electrification Corporation ($RECLTD)			4.7%	5.2%	4.7%
IDFC Limited ($IDFC)	4.8%	4.8%	5.0%	4.3%	3.4%
Median (52 companies)	7.3%	4.6%	4.7%	4.2%	4.2%
Reliance Capital ($RELCAPITAL)	1.1%	1.7%	2.5%	2.3%	3.1%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Fortune Financial Services (India) ($FORTUNEF)	4.7x	9.0x		10.8x	8.9x
Pnb Gilts ($PNBGILTS)	9.0x	14.2x	11.2x	11.3x	8.8x
Srei Infrastructure Finance ($SREINFRA)	6.4x	7.0x	6.2x	7.5x	8.0x
Rural Electrification Corporation ($RECLTD)	8.1x	8.3x	8.0x	7.5x	8.0x
Magma Fincorp ($MAGMA)	1.5x	7.7x	8.5x	7.0x	7.7x
Median (35 companies)	2.6x	4.4x	3.6x	2.9x	2.9x
Reliance Capital ($RELCAPITAL)	10.4x	6.5x	6.5x	6.7x	6.2x

Reliance Capital stock price chart

Reliance Capital financials

mln.	FY2010	FY2011	FY2012

Revenue	61,336	55,360	66,270
EBITDA	20,062	18,040	28,230
Net income	4,345	2,910	4,580
CAPEX	429.9	990.0	1,300
Debt	145,193	203,740	195,900
Cash	8,628	16,340	11,250

About Reliance Capital

Reliance Capital Limited provides various financial services in India. It operates through Finance & Investment, Asset Management, General Insurance, Commercial Finance, and Others segments. The company provides asset management services, including mutual funds, offshore funds, pension funds, and portfolio management services; life insurance products comprising protection, retirement, and investment plans for individuals and groups; and general insurance products, such as health, home, motor, travel, fire, engineering, marine, liability, and aviation insurance products for the corporate and individual customers. It also offers commercial finance services consisting of mortgages loans, loans against property, loans for vehicles, loans for construction equipment, SME loans, business loans, and infrastructure financing. In addition, the company provides retail broking services, such as access to equities, equity options and commodities futures, wealth management, wealth management services, mutual funds, initial public offers, and investment banking services; and distributes third party products, such as life and general insurance products, money transfer, currency exchange, loans, and gold coins, as well as premium products. Further, it is engaged in proprietary investments, institutional broking, and asset reconstruction businesses. The company was formerly known as Reliance Capital & Finance Trust Limited and changed its name to Reliance Capital Limited in January 1995. Reliance Capital Limited was incorporated in 1986 and is based in Mumbai, India. Reliance Capital Limited operates as a subsidiary of Reliance - ADA Group Limited.