Reliance Infrastructure Company Analysis

Industry Profile :  Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Bank’s Logistics Performance Index (LPI) 2016, to rank 35th among 160 countries.

NDA Govt recently added Affordable housing under infrastructure and that opened large potential for that sector as well as for infrastructure.

FDI received in Construction Development sector (townships, housing, built up infrastructure and construction development projects) from April 2000 to March 2017 stood at US$ 24.3 billion, according to the DIPP.  The Government of India has planned an investment worth Rs 45,000 crore (US$ 7.07 billion) for the development of India’s north-eastern regions bordering China, Bhutan, Bangladesh and Myanmar. The Ministry of Road Transport and Highways, Government of India, invested Rs 14,916 crore (US$ 2.32 billion) for the Special Accelerated Road Development Programme for North East (SARDP-NE) and Rs 4,095 crore (US$ 635.6 million) for the National Highway (Original) over the past two years to improve the road infrastructure in India’s north eastern region. The infrastructure sector in India witnessed 33 deals in FY 2016-17 involving US$ 3.49 billion as against US$ 2.98 billion raised across 31 deals in FY 2015-16, with the majority of deals led by the power, roads and renewable sectors, as per investment bank Equirus Capital.

Company Profile  : The company is a part of Anil Dhirubhai Ambani group. The company came into existence when reliance group took over Bombay Suburban Electric Supply (BSES) in 2002. Original BSES was exist since 1 october 1929. The company through its subsidiaries like Reliance Mumbai Metro, Reliance Naval, Reliance Power is operating in various segments of business like Road infra, Power generation, Distribution, trading, transmission. The company is also operating in Defence and having one of the best shipbuilding facility in India. the company is also keeping contracts of 5 brownfield airports for developing and operating including Latur, Nanded, yawatmal, Baramati, Osmanabad.

The company is also operating under build, operate, transfer (BOT) scheme with 11 road projects of 970 kms, worth Rs 11,500 crore. The projects are operative in urban high traffic growth corridors of Delhi, Bangalore, Jaipur, Gurgaon, Agra and Pune.

Shareholding Pattern  : 8 promoter entities hold 49.79%. out of which Large part is pledge. After the Adani deal, this will be done. 161 mutual funds hold 2.36% stake in company. 297 financial Institutions hold 0.4%. Insurance companies like LIC, New India insurance company hold 12%+ stake. Foreign investors hold 22%. around 13% held with non institutional like general public.

Financial and Ratios

 2010-112011-122012-132013-142014-152015-162016-17
Revenue (cr)15,912.8925,040.5823,432.9820,298.7318,851.6018,407.6727,036.47
Net Profit (Cr)1,551.611,586.812,246.831,913.671,800.181,974.561,394.43
NPM (%)9.756.339.589.439.5410.724.40
EPS (Rs)58608573687554
Book Value (Rs)871.66906.20966.15996.771,002.321,030.53948.35
Dividend Per Share7.27.307.47.588.59
Dividend Payout12.3212.098.6611.3011.6811.3216.25
ROE6.706.718.927.386.877.325.97
ROCE3.903.735.174.123.823.912.55
ROA3.052.583.372.752.542.741.41
Debt to Equity0.430.770.820.900.920.820.93
Asset Turnover29.9439.5233.6527.3824.2722.8725.05
Cash Flow from operations2,571.492,334.502,332.735,060.524,734.89

Future Prospect : After the deal with Adani Transmission, the company is debt free. Infrastructure is very important for country like India. Govt initiative like Bharatmala and Metro projects are important. Power sector was going from painful time. Now after UDAY Scheme and many more plans power sector is ready to grow. the company holds subsidiaries like Reliance power, Reliance Naval. The company also sold Cement unit and other power assets. Still it holds power business in Delhi which is majority cash flow generating business. But as group is ready to concentrate on Defence.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter