SUMMER PROJECT

PROGRESS REPORT NO. 2

ON

COMPANY ANALYSIS OF

(RELIANCE INFRASTRUCTURE LTD.)

SUBMITTED TO: SUBMITTED BY:

Name:GRINDER SING H STUDENT NAME:HARSH MIDHA
Designation: BBA UID: 19BBA1329
Chandigarh University Batch 2019-22
Location: Gharuan, Mohali
 Reliance Infrastructure Limited (R-Infra),
formerly Reliance Energy Limited (REL)
and Bombay Suburban Electric
Supply (BSES), is an Indian private sector
enterprise involved in power generation,
infrastructure, construction and defence.[3] It is
part of the Reliance Anil Dhirubhai Ambani
Group. The company is headed by its
Chairman, Anil Ambani, and Chief Executive
Officer, Punit Narendra Garg (since April 06,
2019). The corporate headquarters is in Navi
Mumbai.[4] Reliance Infrastructure's interests
are in the fields of power plants, metro rail,
airports, bridges, toll roads, and defence. It is
a major shareholder in the other group
company, Reliance Power and Reliance
Naval and Engineering Limited.
In Fortune India 500 list of 2019, Reliance
Infrastructure was ranked as the 51st largest
corporation in India with first rank in
'Infrastructure Development' category. As of
March 2018, Reliance Infrastructure has 56
subsidiaries, 8 associate companies, and 2
joint-ventures. The EPC Business division of
the company in 2018 has bagged various
orders, including ₹7,000 crore Versova-
Bandra Sea Link project,[5] ₹3,647
crore Uppur Thermal Power Project, ₹1,881
crore National Highway projects from NHAI in
Bihar & Jharkhand,[6] ₹1,585 crore Mumbai
Metro Line-4 project,[7] ₹1,081
crore Kudankulam Nuclear Power
Plant project[8] and others.

PEER COMPARISON:
NAME P/E (X) P/B (X) ROE % R

Reliance Infra -4.75 0.22 7.87

GMR Infra -5.56 87.64 0.00

Sadbhav Infra -4.75 2.83 263.11

GVK Power Infra -0.98 0.35 0.00

Atlanta Ltd -4.74 0.32 -2.18

Has Reliance Infrastructure Limited is a

good investment?
Current market cap of the company is not even 1/10th of what it used to be at some
point in time:

Over last 6/10 months the stock is giving some returns.

Company is taking some steps to reduce the load on its debt books —

Reliance Infra Sells Reliance Centre In Mumbai To Yes Bank For Rs 1,200 Crore

The proceeds from the sale of the Reliance Centre in Santacruz, Mumbai will be used
only to repay the debt of Yes Bank.

https://www.moneycontrol.com/news/business/reliance-infra-sells-reliance-centre-in-mumbai-to-yes-
bank-for-rs-1200-crore-6718571.html

Even though Income is flat — at least the company has come in green now
Debt to equity ratio is still high, but you can take a chance. High risk stock.

FINANCIAL RATIOS:

KEY FINANCIAL RATIOS OF MAR 21 MAR 20 MAR 19 MAR 18 MAR 17  

RELIANCE
INFRASTRUCTURE (in Rs. Cr.)

PER SHARE RATIOS  

Basic EPS (Rs.) -0.73 39.21 -34.73 63.29 48.99  

Diluted EPS (Rs.) -0.83 39.21 -34.73 63.29 48.99  

Cash EPS (Rs.) 1.53 41.69 -31.61 97.08 84.35  

Book Value 394.46 397.18 543.32 835.82 798.20  

[ExclRevalReserve]/Share (Rs.)

Book Value 394.46 397.18 543.32 835.82 798.20  

[InclRevalReserve]/Share (Rs.)

Dividend / Share(Rs.) 0.00 0.00 0.00 9.50 9.00  

Revenue from Operations/Share 64.22 44.77 30.18 341.01 331.91  

(Rs.)
PBDIT/Share (Rs.) 29.94 75.24 91.10 182.24 155.85  

PBIT/Share (Rs.) 27.68 72.76 87.99 148.43 120.48  

PBT/Share (Rs.) -4.24 37.85 -193.06 58.84 42.98  

Net Profit/Share (Rs.) -0.73 39.21 -34.73 63.28 48.98  

PROFITABILITY RATIOS  

PBDIT Margin (%) 46.61 168.05 301.83 53.44 46.95  

PBIT Margin (%) 43.10 162.50 291.52 43.52 36.29  

PBT Margin (%) -6.60 84.54 -639.67 17.25 12.94  

Net Profit Margin (%) -1.12 87.56 -115.05 18.55 14.75  

Return on Networth / Equity (%) -0.18 9.87 -6.39 7.57 6.13  

Return on Capital Employed (%) 5.94 12.19 11.44 10.86 8.50  

Return on Assets (%) -0.09 4.44 -3.23 2.83 2.24  

Total Debt/Equity (X) 0.05 0.40 0.35 0.36 0.57  

Asset Turnover Ratio (%) 8.14 5.07 2.80 15.25 15.20  

LIQUIDITY RATIOS  

Current Ratio (X) 1.48 1.85 1.60 1.09 1.18  

Quick Ratio (X) 1.48 1.85 1.60 1.07 1.16  

Inventory Turnover Ratio (X) 462.78 320.02 105.85 26.72 28.42  

Dividend Payout Ratio (NP) (%) 0.00 0.00 0.00 14.22 17.35  

Dividend Payout Ratio (CP) (%) 0.00 0.00 0.00 9.26 10.07  

Earnings Retention Ratio (%) 0.00 0.00 0.00 85.78 82.65  

Cash Earnings Retention Ratio 0.00 0.00 0.00 90.74 89.93  

(%)
VALUATION RATIOS  

Enterprise Value (Cr.) 1,356.13 4,171.92 8,333.94 18,643.76 26,693.9  

0

EV/Net Operating Revenue (X) 0.80 3.54 10.50 2.08 3.06  

EV/EBITDA (X) 1.72 2.11 3.48 3.89 6.51  

MarketCap/Net Operating 0.55 0.23 4.53 1.25 1.71  

Revenue (X)

Retention Ratios (%) 0.00 0.00 0.00 85.77 82.64  

Price/BV (X) 0.09 0.03 0.25 0.51 0.71  

Price/Net Operating Revenue 0.55 0.23 4.53 1.25 1.71  

Earnings Yield -0.02 3.88 -0.25 0.15 0.09

ANNUAL REPORT OF YEAR 2018.

Financial year ended March 31, 2018

Particulars
Rs.in crore ** US $ Million
 Total Income 11,430 1,754

Gross Profit before depreciation 2,437 374

Depreciation 889 136

Profit before taxation 1,548 238

Tax expenses (Net) (including deferred tax

(83) (13)
and tax for earlier years)

Net profit from discontinuing operation 34 5

Profit after taxation 1,665 256

Balance of profit brought forward from

377 57
previous year

Other comprehensive income recognised

19 3
directly in retained earnings

Add: Transfer on Scheme of Amalgamation - -

Profit available for appropriations 2,061 316

Dividend on equity shares (including tax on

283 43
dividend) (Net)

Transfer to General Reserve 1,000 153

Transfer to Debenture Redemption Reserve 150 23

Balance carried to Balance Sheet 627 97

SWOT ANALYSIS OF RELIANCE

INFRASTRUCTURE LIMITED.

Strengths in the SWOT Analysis of Reliance :

Strong market position in various categories: RIL is the first Indian
private sector company to feature into the Fortune Global 500. With leading
market position in many of its businesses, Reliance is a business giant in
India with strong positions in Textile, energy, Retail etc. Reliance has also
entered Telecom industry in India with Jio and is sweeping the market.

Brand Name and financial position allow RIL to expand: Reliance is a

strong brand name and capital position which allows it to expand its
businesses and also venture into newer businesses.

The operational advantage in refining: RIL has the world’s largest oil

refinery in Jamnagar and is one of the world’s largest private owned
refining companies. With the use of latest technology, Reliance’s refinery in
Jamnagar is operationally efficient which gives great benefits for Reliance
as it gets higher yields.

Expansion in the retail industry: Reliance Retail (RRL) is expanding

throughout the country with putting emphasis on backwards integration.
With great improvements in the value chain from procurement from farmers
to selling to customers, Reliance has increased its revenues substantially
and was the largest Indian retailer in FY 2015.

Reliance Jio: Reliance Jio has set the telecom industry by a storm.

Reliance has laid out a superlative infrastructure for 4G wireless services
throughout the nation which has provided it with the immense competitive
advantage. Jio has also helped Reliance enhance its brand image and
become a mass popular brand.

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Weaknesses in the SWOT Analysis of Reliance :
Production declining in exploratory blocks: RIL’s gas production from
two of its major plants, KG-D6 project and Tapti Fields is decreasing due to
various natural and operational challenges. A decrease in production
affects supply and operational margins.

Recent divesting and relinquishing activities affects growth: RIL

recently divested in some of its production sharing contracts in Dubai,
Yemen etc. This affects global expansion plans for RIL.

Legal proceedings and litigations: RIL has been subjected to various

legal proceedings and litigations in the past. Recently, RIL has had to pay a
hefty penalty amount to the government. Such instances impact the
reputation of the company.

Opportunities in the SWOT Analysis of Reliance :

New Plants: RIL has commissioned a few new plants recently, for
instance, PET resin plant and Purified Terephthalic Acid (PTA) plant at
Dahej, Gujarat. Expanding its operations facilities will further increase
production and strengthen RIL’s position in the market.

Investing in attractive international oil and gas destinations: In 2015,

RIL won the bid for Myanmar Offshore block with 96% interest. RIL should
continue making such investments to expand its operations globally.

CBM as unconventional natural gas: CBM is a natural gas extracted

from coal beds.  RIL has two CBM blocks under it and is set to utilise CBM
as the unconventional natural gas resource.

Advertisement report
New offers in Reliance Jio: Mukesh Ambani’s pet project Reliance Jio
has already become one of the nation’s largest telecom networks. Reliance
Jio needs to bring out new offers and a retention policy to retain the
customers who might as well drop Jio for another offer from other telecom
giants.

Threats in the SWOT Analysis of Reliance :

Intense competition in all sectors: RIL faces strong competition from
various state-owned companies in the Oil, Petroleum and Gas industries.
IOC, HPCL and BPC are state owned companies which are its biggest
competitors.

In Retail, RIL faces stiff competition from the Future group, D-Mart etc.

Such competition limits market share.

In telecom, Jio is up against the giants of the industry

like Vodafone, Airtel and Idea. These companies are looking for a chance
to regain customers lost to Jio.

Reliance Jio free offers ending: Reliance Jio has provided the customers
with free data and calling offers in its introductory package and
has extended the offers a few times. Now, these offers are about to end
very soon. This will test the retaining capacity of Reliance Jio.