Reliance Industries EBITDA surged on 38.9% and EBITDA Margin increased slightly on 1.3 pp from 15.1% to 16.4%

27-04-2018 • About Reliance Industries ($RELIANCE) • By InTwits

Reliance Industries reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:

Reliance Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.5%.
The company has business model with low profitability: ROIC is 9.3%
It operates with medium-size leverage: Net Debt/EBITDA is 3.3x while industry average is 3.7x

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

Revenue and profitability

Reliance Industries's Revenue surged on 28.3%. During the last 5 years Revenue growth bottomed in FY2016 at -27.0% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.3 pp from 15.1% to 16.4% in FY2018. EBITDA Margin grew at 2.2 pp per annum in FY2014-FY2018.

Net Income margin decreased slightly on 0.58 pp from 9.8% to 9.2% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2016 at 10.9% and was declining since that time.

Investments (CAPEX, working capital and M&A)

Reliance Industries's CAPEX/Revenue was 18.9% in FY2018. CAPEX/Revenue increased on 2.0 pp from 16.9% in FY2015 to 18.9% in FY2018. Average CAPEX/Revenue for the last three years was 20.5%. Reliance Industries has spent a lot to CAPEX (115% of EBITDA) to fuel its growth. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 25.6%.

Return on investment

The company operates at good ROE (12.9%) while ROIC is low (9.3%). ROIC increased slightly on 1.8 pp from 7.5% to 9.3% in FY2018. ROE increased slightly on 0.87 pp from 12.1% to 12.9% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2015 at 7.0% and was growing since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 3.4x. Net Debt / EBITDA dropped on 0.8x from 4.2x to 3.3x in FY2018. Debt jumped on 11.3% while cash jumped on 40.8%. During the last 5 years Net Debt/EBITDA topped in FY2017 at 4.2x.

Reliance Industries has short term refinancing risk: cash is only 5.7% of short term debt.

Financial and operational results

FY ended 31-03-2018

Reliance Industries ($RELIANCE) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	4,344,600	3,754,350	2,739,990	3,053,820	3,916,770	28.3%
EBITDA	350,300	376,010	417,040	461,940	641,760	38.9%
Net Income	224,930	235,660	297,450	299,010	360,750	20.6%
Balance Sheet
Cash	379,090	125,200	110,280	30,230	42,550	40.8%
Short Term Debt	377,420	400,860	390,180	444,510	745,880	67.8%
Long Term Debt	1,010,160	1,207,770	1,416,470	1,521,480	1,441,750	-5.2%
Cash flow
Capex	600,870	633,640	468,980	781,090	739,530	-5.3%
Ratios
Revenue growth	9.4%	-13.6%	-27.0%	11.5%	28.3%
EBITDA growth	6.2%	7.3%	10.9%	10.8%	38.9%

EBITDA Margin	8.1%	10.0%	15.2%	15.1%	16.4%	1.3%
Net Income Margin	5.2%	6.3%	10.9%	9.8%	9.2%	-0.6%
CAPEX, % of revenue	13.8%	16.9%	17.1%	25.6%	18.9%	-6.7%

ROIC	7.3%	7.0%	7.2%	7.5%	9.3%	1.8%
ROE	11.8%	11.3%	13.2%	12.1%	12.9%	0.9%
Net Debt/EBITDA	2.9x	3.9x	4.1x	4.2x	3.3x	-0.8x

Peers in Integrated Oil & Gas

Below you can find Reliance Industries benchmarking vs. other companies in Integrated Oil & Gas 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.

Reliance Industries stock price chart

Reliance Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	2,037,397	2,658,106	3,585,010
EBITDA	301,683	377,955	347,630
Net income	245,031	192,937	197,240
CAPEX	232,781	338,650	163,810
Debt	646,055	841,520	924,470
Cash	138,908	155,280	338,400

About Reliance Industries

Reliance Industries Limited, together with its subsidiaries, is engaged in the exploration, development, and production of crude oil and natural gas in India and internationally. It operates through three segments: Petrochemicals, Refining, and Oil and Gas. The Petrochemicals segment produces and markets petrochemical products, such as high and low density polyethylene, polypropylene, polyvinyl chloride, poly butadiene rubber, polyester yarn, polyester fibre, purified terephthalic acid, paraxylene, ethylene glycol, olefins, aromatics, linear alkyl benzene, butadiene, acrylonitrile, caustic soda, and polyethylene terephthalate. The Refining segment is involved in the production and marketing of petroleum products. The Oil and Gas segment is engaged in the exploration, development, and production of crude oil and natural gas. The company also offers textile products, including suitings, shirtings, jackets, trousers, and readymade garments; and ready-to-stitch and take away fabrics. In addition, it operates retail outlets comprising Reliance retail, food and grocery specialty stores, hypermarkets, and wholesale stores; electronic, digital technology, jewelry, apparel, footwear, toys, and optical specialty stores; furniture, furnishing, and homeware specialty stores; and automotive services and products specialty stores. Further, the company is engaged in the retail of transportation fuels, auto LPG, petroleum, and lubricant products, as well as offers fleet management services and highway hospitality services. The company is also involved in SEZ development and telecom/broadband businesses. The company was formerly known as Reliance Textile Industries Limited and changed its name to Reliance Industries Limited in June 1985. Reliance Industries Limited was incorporated in 1973 and is based in Mumbai, India.