Reliance Infrastructure reports 87.6% Net Income growth in 2017 and 0.67 pp EBITDA Margin decline from 20.2% to 19.5%

16-04-2017 • About Reliance Infrastructure ($RELINFRA) • By InTwits

Reliance Infrastructure reported FY2017 financial results today. Overall the company's long term financial model is characterised by the following facts:

The company has potentially unprofitable business model: ROIC is 5.3%
It operates with high leverage: Net Debt/EBITDA is 5.2x while industry average is 6.7x

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

Revenue and profitability

Reliance Infrastructure's Revenue decreased on 6.7%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.67 pp from 20.2% to 19.5% in FY2017.

Net Income margin increased on 3.0 pp from 3.0% to 5.9% in FY2017.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 4.7% in FY2017. CAPEX/Revenue increased on 4.7 pp from in FY2014 to 4.7% in FY2017.

Return on investment

The company operates at low ROIC (5.3%) and ROE (6.3%). ROIC decreased slightly on 1.2 pp from 6.5% to 5.3% in FY2017. ROE increased on 3.2 pp from 3.1% to 6.3% in FY2017. During FY2013-FY2017 ROE bottomed in FY2016 at 3.1%.

Leverage (Debt)

Company's Net Debt / EBITDA is 5.2x and Debt / EBITDA is 5.3x. Net Debt / EBITDA dropped on 0.6x from 5.8x to 5.2x in FY2017. Debt dropped on 18.7% while cash surged on 44.7%. During FY2013-FY2017 Net Debt/EBITDA topped in FY2015 at 10.9x and was declining since that time.

Reliance Infrastructure has short term refinancing risk: cash is only 11.7% of short term debt.

Financial and operational results

FY ended 31-03-2017

Reliance Infrastructure ($RELINFRA) key annual financial indicators

mln. INR	2013	2014	2015	2016	2017	2017/2016
P&L
Revenue	155,101	132,815	121,403	257,416	240,268	-6.7%
EBITDA	29,586	28,059	23,053	51,895	46,836	-9.7%
Net Income	22,468	19,137	18,002	7,596	14,252	87.6%
Balance Sheet
Cash	4,917	6,504	5,351	4,676	6,767	44.7%
Short Term Debt	93,405	92,400	95,973	68,413	57,629	-15.8%
Long Term Debt	126,357	150,491	161,725	237,873	191,294	-19.6%
Cash flow
Capex				25,538	11,293	-55.8%
Ratios
Revenue growth	-10.7%	-14.4%	-8.6%	112.0%	-6.7%
EBITDA growth	8.5%	-5.2%	-17.8%	125.1%	-9.7%

EBITDA Margin	19.1%	21.1%	19.0%	20.2%	19.5%	-0.7%
Net Income Margin	14.5%	14.4%	14.8%	3.0%	5.9%	3.0%
CAPEX, % of revenue				9.9%	4.7%	-5.2%

ROIC	5.2%	4.5%	2.8%	6.5%	5.3%	-1.2%
ROE	8.9%	7.3%	6.7%	3.1%	6.3%	3.2%
Net Debt/EBITDA	7.3x	8.4x	10.9x	5.8x	5.2x	-0.6x

Peers in Electric Utilities

Below you can find Reliance Infrastructure benchmarking vs. other companies in Electric Utilities 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	FY2013	FY2014	FY2015	FY2016	FY2017
Ksk Energy Ventures ($KSK)	13.4%	-4.3%	12.7%	83.2%	-
Adani Power ($ADANIPOWER)	65.7%	128.0%	21.7%	34.1%	-
Gvk Power & Infrastructure ($GVKPIL)	4.6%	8.2%	8.1%	32.5%	-
Gmr Infrastructure ($GMRINFRA)	26.5%	7.5%	3.4%	24.0%	-
Power Grid Corporation Of India ($POWERGRID)	27.2%	18.9%	12.8%	21.0%	-
Median (16 companies)	15.3%	8.8%	8.1%	2.6%	-
Reliance Infrastructure ($RELINFRA)	-	-14.4%	-8.6%	112.0%	-6.7%

Top companies by EBITDA margin, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Power Grid Corporation Of India ($POWERGRID)	85.6%	84.9%	85.8%	87.0%	-
Orient Green Power Company ($GREENPOWER)	53.3%	57.8%	82.8%	86.9%	-
Nhpc ($NHPC)	66.5%	59.3%	63.4%	59.9%	-
Jaiprakash Power Ventures ($JPPOWER)	70.6%	60.1%	63.3%	57.2%	-
Gvk Power & Infrastructure ($GVKPIL)	27.4%	37.2%	38.2%	44.9%	-
Median (16 companies)	25.5%	26.2%	23.5%	31.3%	-
Reliance Infrastructure ($RELINFRA)	19.1%	21.1%	19.0%	20.2%	19.5%

Top companies by CAPEX/Revenue, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Power Grid Corporation Of India ($POWERGRID)	172.4%	173.4%	169.8%	120.3%	-
Nava Bharat Ventures ($NBVENTURES)	30.5%	70.6%	55.3%	89.8%	-
Jaiprakash Power Ventures ($JPPOWER)	341.9%	229.9%	113.6%	66.7%	-
Orient Green Power Company ($GREENPOWER)	170.0%	77.0%	19.3%	52.8%	-
Gvk Power & Infrastructure ($GVKPIL)	136.7%	109.1%	52.7%	36.9%	-
Median (14 companies)	43.3%	35.1%	20.1%	21.1%	-
Reliance Infrastructure ($RELINFRA)	-	-	-	9.9%	4.7%

Top companies by ROIC, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Ptc India ($PTC)	10.4%	13.6%	12.3%	13.6%	-
Torrent Power ($TORNTPOWER)	7.3%	4.9%	8.1%	12.2%	-
Adani Power ($ADANIPOWER)	-0.4%	5.5%	6.6%	11.2%	-
Tata Power Co ($TATAPOWER)	8.8%	9.0%	7.1%	10.6%	-
Alstom T&D India ($ALSTOMT&D)	15.7%	14.6%	16.1%	10.6%	-
Median (18 companies)	5.8%	5.5%	6.2%	6.1%	-
Reliance Infrastructure ($RELINFRA)	5.2%	4.5%	2.8%	6.5%	5.3%

Top companies by Net Debt / EBITDA


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Lanco Infratech ($LITL)	12.9x	19.2x	17.5x	18.1x	-
Gvk Power & Infrastructure ($GVKPIL)	23.9x	20.1x	20.2x	14.2x	-
Ksk Energy Ventures ($KSK)	16.2x	27.0x	35.7x	12.4x	-
Jaiprakash Power Ventures ($JPPOWER)	13.1x	16.7x	13.4x	10.7x	-
Gmr Infrastructure ($GMRINFRA)	15.1x	16.7x	17.7x	10.4x	-
Median (17 companies)	8.0x	6.2x	6.1x	5.8x	-
Reliance Infrastructure ($RELINFRA)	7.3x	8.4x	10.9x	5.8x	5.2x

Reliance Infrastructure stock price chart

Reliance Infrastructure financials

mln.	FY2010	FY2011	FY2012

Revenue	144,442	98,095	173,632
EBITDA	12,836	17,957	27,259
Net income	15,194	15,516	15,868
CAPEX	0.000	0.000	0.000
Debt	85,839	116,744	182,897
Cash	4,494	6,358	13,590

About Reliance Infrastructure

Reliance Infrastructure Limited, together with its subsidiaries, is engaged in the generation, transmission, and distribution of electrical power in India. It operates through three segments: Electrical Energy; Engineering, Procurement, and Construction (EPC), and Contracts; and Infrastructure. The company is involved in the ownership and operation of coal, gas, hydro, wind and solar energy, and combined cycle power generation projects with aggregate capacity of approximately 941 MW located in Maharashtra, Andhra Pradesh, Kerala, Karnataka, and Goa; transmission of electricity through its transmission networks in the States of Maharashtra, Gujarat, and Himachal Pradesh; distribution of power to approximately 6 million consumers in Mumbai and Delhi, as well as various parts of India to residential, industrial, commercial, and other consumers; and trade of electricity. Its high tension cable network comprises 4,137 kilometers; low tension cable network includes 5,892 kilometers installed capacity of power transformers consist of 3,042 MVA; and installed capacity of distribution transformers comprises 4,613 MVA with 5,988 sub-stations. The company is also engaged in the provision of integrated design, engineering, procurement, and project management services for coal-based thermal and gas-power projects, and transmission lines; development, operation, and maintenance of toll roads, metro rails, and airports; construction of roads and special economic zones; and development of real estate projects. In addition, it is involved in the exploration and production of coal bed methane through its 45% share in four blocks covering an area of 3,266 square kilometers located in Madhya Pradesh, Andhra Pradesh, and Rajasthan; and exploration and production of an oil and gas through its 70% share in a block covering an area of 3,619 square kilometers located in Mizoram. The company was incorporated in 1929 and is based in Navi Mumbai, India.