Reliance Industries revenue dropped on 26.3% in 2016 while EBITDA Margin increased on 5.8 pp from 10.0% to 15.8%

22 Apr 2016 • About Reliance Industries ($RIGD) • By InTwits

Reliance Industries reported FY2016 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 12.2%. At the same time it's a lot of higher than industry average of 3.0%.
CAPEX is quite volatile: 496,620 in FY2016, 633,640 in FY2015, 600,870 in FY2014, 307,260 in FY2013, 163,810 in FY2012
The company has business model with low profitability: ROIC is at 7.3%
It operates with medium-size leverage: Net Debt/EBITDA is 3.9x while industry average is 3.9x

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

Reliance Industries ($RIGD) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	3,585,010	3,970,620	4,344,600	3,754,350	2,765,440	-26.3%
EBITDA	347,630	329,880	350,300	376,010	437,070	16.2%
Net Income	197,240	208,790	224,930	235,660	276,300	17.2%
Balance Sheet
Cash	338,400	372,670	379,090	125,200	106,710	-14.8%
Short Term Debt	270,950	362,590	377,420	400,860	398,180	-0.7%
Long Term Debt	653,520	709,600	1,010,160	1,207,770	1,420,000	17.6%
Cash flow
Capex	163,810	307,260	600,870	633,640	496,620	-21.6%
Ratios
Revenue growth	34.9%	10.8%	9.4%	-13.6%	-26.3%
EBITDA growth	-8.0%	-5.1%	6.2%	7.3%	16.2%
EBITDA Margin	9.7%	8.3%	8.1%	10.0%	15.8%	5.8%
Net Income Margin	5.5%	5.3%	5.2%	6.3%	10.0%	3.7%
CAPEX, % of revenue	4.6%	7.7%	13.8%	16.9%	18.0%	1.1%
ROIC	8.5%	7.6%	7.3%	7.0%	7.3%	0.4%
ROE	12.2%	11.9%	11.8%	11.3%	12.0%	0.7%
Net Debt/EBITDA	1.7x	2.1x	2.9x	3.9x	3.9x	-0.0x

Revenue and profitability

The company's Revenue dropped on 26.3% in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.8 pp from 10.0% to 15.8% in FY2016.

Net Income marign increased on 3.7 pp from 6.3% to 10.0% in FY2016.

Capital expenditures (CAPEX) and working capital investments

Reliance Industries's CAPEX/Revenue was 18.0% in FY2016. The company showed fast CAPEX/Revenue growth of 10.2 pp from 7.7% in FY2013 to 18.0% in FY2016. It's average CAPEX/Revenue for the last three years was 16.2%.The company has spent a lot to CAPEX (114% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at low ROIC (7.35%) and ROE (11.96%). ROIC showed almost no change in FY2016. ROE increased slightly on 0.66 pp from 11.3% to 12.0% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.9x and Debt / EBITDA is 4.2x. Net Debt / EBITDA decreased on 0.029x from 3.9x to 3.9x in FY2016. Debt jumped on 13.0% in FY2016 while cash dropped on 14.8% in FY2016.

Appendix 1: 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.