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Reliance Mar 2015 Results in Charts: Massive Revenue Drop, High GRMs Give Profit Growth

Reliance Industries has announced kinda sorta okay results. Revenues are down 33% in the quarter to 70,000 cr. but profits are up, because their costs have fallen too (lower crude prices as crude is their largest input)

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EPS growth has taken a big hit as the stock’s 12 month EPS growth is at 4.7%. At current EPS of 80, the stock trades at a trailing P/E of about 11.5x with the price at about Rs. 926.

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Debt levels have gone up considerably, with new capex in place for everything (from petrochemicals to refining to even Reliance Jio and Retail)

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Gross Refining Margins (GRM) are at $10.1 per barrel even with the drop in crude prices, a nice surprise as it would be expected to contract on falling crude prices and a lower light-heavy differential.

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The Exploration business continues to suck. Look at yields on their best fields:

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The View

For what it’s worth, the big deal will be Jio, the telecom mover. The rest of the businesses are in decline, and even the $10 GRM is probably a one-off. Their new subsidiaries in the form of TV18 and Network18 are not significant in terms of numbers.

The Jio deal will be 4G broadband access, and what might be a mouth-wateringly low cost. This can drive massive revenues to Reliance, and potential drive them to even acquire a large telecom company to grow.

Reliance will also start operating fuel pumps. This was, earlier, a dead deal because the government decided to subsidize petrol and diesel sold through the public sector marketing companies (IOC, BPCL and HPCL)

Overall results are weak, and RIL is down today; this stock has no technical reasons to stay in other than at 1000 or above.

Note: No positions.

  • Ramki says:

    What about RIL’s petchem and retail biz ?The former is seeing massive capex but how will its outcome shape earnings beyond fy16?

  • piyush says:

    I find left with so many questions when i see the charts above. Increase in debt of 80000 cr within 5-6 quarters? That’s a lot of money. How much can telecom guzzle? 20-30k? Retail cannot absorb more than 5000 crores unless you are buying up the physical real estate. A new refinery can but they are not building one. So where is the debt binge going? Especially if its not adding to cash means all of it must be capex. Did they really do 80000 crores of capex within 18 months !
    Were there revenues really just 30000 cr a quarter in beginning of 2009, and by mid of last year their revenues had grown 4x in 5-6 yrs?? And share price hasn’t really moved at all?

  • Kris says:

    Why do we trust any of Reliance’s numbers? Has anyone looked at their oil derivative, of coarse not, they are “confidential”. China’s GDP numbers are more trustworthy than Reliance’s.

  • chirag says:

    RIL was known for two things
    1) Best in class execution of projects, and
    2) Managing the environment
    I think MDA has lost that mojo. To his credit he lasted longer than his brother.
    Too sad, that both betrayed their father’s most cherished legacy – shareholder wealth creation.
    And yes the point of quality of financial disclosures – when their business operations are not going great, the least they should do is to put the 1000s of VP at RIL HQ to work on improving disclosures.