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Reliance Infrastructure Net Debt / EBITDA jumped on 2.5x from 8.4x to 10.9x in 2015 while Revenue decreased on 8.6%

27 May 2015 • About Reliance Infrastructure ($RIFS) • By InTwits

Reliance Infrastructure reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Reliance Infrastructure is a company in decline: FY2015 revenue growth was -8.6%, 5 years revenue CAGR was -3.4%
  • The company has potentially unprofitable business model: ROIC is at 2.8%
  • It operates with high leverage: Net Debt/EBITDA is 10.9x while industry average is 8.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Reliance Infrastructure ($RIFS) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue98,095173,632155,101132,815121,403-8.6%
EBITDA17,95727,25929,58628,05923,053-17.8%
Net Income15,51615,86822,46819,13718,002-5.9%
Balance Sheet
Cash6,35813,5904,9176,5045,351-17.7%
Short Term Debt34,08065,89493,40592,40095,9733.9%
Long Term Debt82,665117,003126,357150,491161,7257.5%
Cash flow
Ratios
Revenue growth-32.1%77.0%-10.7%-14.4%-8.6%
EBITDA growth39.9%51.8%8.5%-5.2%-17.8%
EBITDA Margin18.3%15.7%19.1%21.1%19.0%-2.1%
Net Income Margin15.8%9.1%14.5%14.4%14.8%0.4%
ROIC3.9%5.9%5.2%4.5%2.8%-1.7%
ROE7.0%6.6%8.9%7.3%6.7%-0.5%
Net Debt/EBITDA6.1x6.2x7.3x8.4x10.9x2.5x

Revenue and profitability


Reliance Infrastructure's Revenue decreased on 8.6% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 21.1% to 19.0% in FY2015.

Net Income marign showed almost no change in FY2015.

Return on investment


The company operates at low ROIC (2.79%) and ROE (6.72%). ROIC decreased slightly on 1.7 pp from 4.5% to 2.8% in FY2015. ROE decreased slightly on 0.54 pp from 7.3% to 6.7% in FY2015.

Leverage (Debt)


Debt level is 10.9x Net Debt / EBITDA and 11.2x Debt / EBITDA. Net Debt / EBITDA jumped on 2.5x from 8.4x to 10.9x in FY2015. Debt increased on 6.1% in FY2015 while cash dropped on 17.7% in FY2015.

Appendix 1: Peers in Electric Utilities


Below we provide Reliance Infrastructure benchmarking against other companies in Electric Utilities industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Power Co ($TPCL)33.7%27.0%8.6%-6.0%
 
Median (1 company)33.7%27.0%8.6%-6.0%
Reliance Infrastructure ($RIFS)77.0%-10.7%-14.4%-8.6%


Top companies by EBITDA margin, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Power Co ($TPCL)23.6%20.5%20.1%21.5%18.7%
 
Median (1 company)23.6%20.5%20.1%21.5%18.7%
Reliance Infrastructure ($RIFS)18.3%15.7%19.1%21.1%19.0%


Top companies by CAPEX/Revenue, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Power Co ($TPCL)47.5%20.6%12.9%12.1%10.4%
 
Median (1 company)47.5%20.6%12.9%12.1%10.4%


Top companies by ROIC, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Power Co ($TPCL)10.1%8.9%8.8%9.0%7.1%
 
Median (1 company)10.1%8.9%8.8%9.0%7.1%
Reliance Infrastructure ($RIFS)3.9%5.9%5.2%4.5%2.8%


Top companies by Net Debt / EBITDA

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Power Co ($TPCL)4.9x5.7x5.4x5.0x6.2x
 
Median (1 company)4.9x5.7x5.4x5.0x6.2x
Reliance Infrastructure ($RIFS)6.1x6.2x7.3x8.4x10.9x