Industry analysis : Power is very important for any economy. No matter if it is emerging or develop, or undeveloped. In fact the use of power per head is deciding factor in many economies weather it is growing or not.
Oil and Gas sector is core sector for India. India’s economic growth is closely related to energy demand; therefore the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment. The demand for oil and gas is ever increasing in India for many reasons. From industrial use to cooking to power generation. It is one of the most decisive factor in indan economy in many important decision. As the India is net importer of Oil, it is also affect import and export. Even though India is importing Crude Oil, we develop refining plant by investing in it and that is why we are leading country in the oil refining business.
The Government of India has adopted several policies to fulfil the increasing demand. The government has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.
India is one of the largest consumer of oil and gas. Domestic refiners’ import of crude oil increased 9.1 per cent year-on-year to around 18.81 million metric tons during August 2016. Total fuel consumption is expected to grow around 5-6 per cent in FY 2016-17 and thereafter, while consumption of gasoline is expected to grow around 9-10 per cent over the medium term, supported by robust passenger vehicle sales amid low crude oil prices. The country’s gas production is expected to touch 90 Billion Cubic Metres (BCM) in 2040 from 35 BCM in 2013. Gas pipeline infrastructure in the country stood at 15,808 km in December 2015.
The Sector is also ahead in FDI investment and Domestic investments.
According to data released by the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas sector attracted FDI worth US$ 6.67 billion between April 2000 and March 2016.
Company analysis Reliance Industry, one of the largest private Sector company in India and second largest Company market Capitalization.
The company mainly operating in Oil exploration and Production, Petroleum Refining, Petrochemicals, Telecommunications, entertainment, retail, Digital hardware, project development and more. Some products and brands offer by company is as follows
- Crude Oil and Natural Gas
- Propylene, Naphtha, gasoline,
- Aviation Turbine Fuel
- Petroleum Coke, Sulphur
- High and low density polypropylene
- Ready to use suiting and shirting under brand Vimal
- Reliance Digital
- Reliance Jio
Financials and Ratios.
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Revenue 251222 336096 368295 399053 337797 240740
Net Profit 20286 20040 21003 21984 22719 27417
Net Profit Margin 8.17 6.07 5.82 5.63 6.90 11.75
EPS 62 61.21 64.82 68.05 70.25 84.66
Book value 446 498.22 554.17 609.76 667.98 741.28
ROE 13.88 12.29 11.73 11.15 10.51 11.41
ROCE 9.46 8.85 8.92 8.08 7.41 8.24
ROA 7.12 6.78 6.59 5.98 5.71 5.98
Debt to Equity 0.43 0.36 0.30 0.43 0.41 0.38
Asset Turnover 87.16 111.77 113.11 106.13 82.72 50.93
Dividend per Share 8 8.50 9 9.5 10 10.5
Dividend Payout 11.75 12.62 12.51 12.70 12.95 11.28
Future Prospects : In last few years the company is investing heavily all over the economy. From grocery and related as Reliance fresh to Telecommunications industry, E-Commerce. That all investments push Asset Turnover around 50% if that all Venture become successful, the stock may easily become double in 3-5 Year. Now as the Investment’s are being mature and ready to give return and make changes in their respective industry, it is important to see what will happen with the stock Price as the return from the new business is important factor for company. Most important is that petroleum and petrochemicals business is still making money for business that makes it Positive as it keep debt to equity under Control. Though we are calling it is petrochemical or Petroleum company, Jio is very big and may decide the Future.
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