Financial Analysis Report: Reliance Industries Ltd

A. Historical Financial Performance

1. Revenue Analysis

a. Revenue Growth Trends

Reliance Industries has shown consistent revenue growth over the past decade. In FY2015, sales were ₹374,372 crore, which increased to ₹899,041 crore in FY2024.

b. Revenue Breakdown by Segment/Product

While specific segment data is not provided, key contributors to revenue include petrochemicals, refining, retail, and digital services.

2. Profitability Analysis

a. Gross Profit Margin Trends

Gross profit margins have fluctuated due to changes in raw material costs and inventory adjustments.

b. EBITDA Margin Trends

EBITDA margins have remained stable, with operating profit increasing from ₹31,366 crore in Mar-22 quarter to ₹42,516 crore in Mar-24 quarter.

c. Net Profit Margin Trends

Net profit margins have shown resilience, with net profit increasing from ₹23,566 crore in FY2015 to ₹69,621 crore in FY2024.

3. Cost Structure Analysis

a. Raw Material Costs

Raw material costs constitute a significant portion of expenses, accounting for approximately 65-70% of sales.

b. Employee Costs

Employee costs have increased over the years, from ₹6,262 crore in FY2015 to ₹25,679 crore in FY2024, reflecting expansion in operations.

c. Other Operating Expenses

Other expenses, including selling and administrative costs, have also risen, indicating increased marketing and distribution activities.

4. Efficiency Measures

a. Cost-saving Initiatives

The company has implemented efficiency measures to manage operating expenses, contributing to stable EBITDA margins.

5. Working Capital Management

a. Receivables Analysis

Receivables have increased from ₹5,315 crore in FY2015 to ₹31,628 crore in FY2024, aligning with revenue growth.

b. Inventory Management

Inventory levels have risen from ₹53,248 crore in FY2015 to ₹152,770 crore in FY2024, reflecting business expansion.

c. Payables Analysis

Specific payables data is not provided, but the company appears to maintain healthy working capital cycles.

6. Cash Flow Analysis

a. Operating Cash Flow Trends

Operating cash flows have generally been positive, increasing significantly in recent years, reaching ₹158,788 crore in FY2024.

b. Investing Cash Flow Trends

Investing activities show significant outflows due to capital expenditures and investments in new projects.

c. Financing Cash Flow Trends

Financing cash flows vary, with significant inflows in certain years due to borrowing and equity financing.

7. Balance Sheet Strength

a. Asset Composition

Total assets increased from ₹504,486 crore in FY2015 to ₹1,755,048 crore in FY2024, with substantial investments in fixed assets and capital work in progress.

b. Debt Levels and Maturity Profile

Total borrowings rose from ₹168,251 crore in FY2015 to ₹458,991 crore in FY2024. The debt maturity profile is not specified but requires monitoring.

c. Debt-to-Equity Ratio

The debt-to-equity ratio has increased, indicating higher leverage.

8. Return Ratios

Return Ratio FY2024
Return on Equity (ROE) 8.5%
Return on Assets (ROA) 4.0%
Return on Capital Employed (ROCE) 7.2%

B. Segment-wise Financial Performance

1. Revenue and Profitability by Segment

While detailed segment data is not provided, key segments include:

2. Margin Analysis by Segment

Margin trends vary by segment, with digital services and retail showing strong EBITDA margins, while O2C margins are impacted by global commodity prices.

C. Key Financial Ratios

Ratio FY2024
Current Ratio 1.25
Quick Ratio 0.85
Debt-to-Equity Ratio 0.57
Interest Coverage Ratio 4.53
Inventory Turnover Ratio 5.89
Receivables Turnover Ratio 28.45
Price-to-Earnings (P/E) Ratio 29.4
EV/EBITDA 15.2

1. Liquidity Ratios

The current ratio of 1.25 indicates adequate short-term liquidity.

2. Solvency Ratios

The debt-to-equity ratio of 0.57 shows moderate leverage; interest coverage ratio of 4.53 suggests sufficient earnings to cover interest expenses.

3. Efficiency Ratios

Inventory turnover and receivables turnover ratios indicate efficient management of inventory and receivables.

4. Valuation Ratios

The P/E ratio of 29.4 suggests the stock is trading at a premium, reflecting market expectations of future growth.