1. business and industrial
2. company
3. earnings

RELIANCE INDUSTRIAL INFRASTRUCTURE LTD
Result Update(PARENT BASIS): Q2 FY15
BUY
CMP
493.10
Target Price
542.00
OCTOBER 16th 2014
ISIN: INE046A01015
Index Details
SYNOPSIS
Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg.)
Market Cap (Rs. in mn.)
Construction & Engineering
523445
10.00
659.00/304.00
76000
7445.81
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS
Net Sales
EBITDA
Net Profit
EPS
P/E
FY14A
848.32
438.40
241.40
15.99
30.84
FY15E
950.12
407.72
252.57
16.73
29.48
FY16E
1045.13
466.01
292.99
19.40
25.41
Shareholding Pattern (%)
Reliance Industrial Infrastructure Ltd (RIIL)
engaged in business of setting up operating
Industrial Infrastructure & providing services
connected with computer software and data
processing.
Revenue for the 2nd quarter rose by 14.96% to Rs.
237.95 million from Rs. 206.98 million, when
compared with the prior year period.
During 2nd quarter of FY15, Net profit decrease to
Rs. 54.26 million from Rs. 58.98 million, when
compared with the prior year period.
Profit before interest, depreciation and tax for the
quarter stood at Rs. 89.37 million compared to Rs.
97.95 million over the corresponding quarter of
the previous year.
During H1 FY15, Total Revenue of Rs. 492.50
million an increase of 9.8% as compared to Rs.
448.40 million in the corresponding period of the
previous year.
1 Year Comparative Graph
Income from product transportation services
increased by 38.3% from Rs. 88.90 million to Rs.
122.90 million on YoY basis.
Income from hiring of construction machineries
increased by 2.7% from Rs. 163.80 million to Rs.
168.20 million on Y-o-Y basis.
RELIANCE INDUSTRIAL INFRASTRUCTURE
BSE SENSEX
Net Sales and PAT of the company are expected to
grow at a CAGR of 9% and 6% over 2013 to 2016E
respectively.
PEER GROUPS
CMP
MARKET CAP
EPS
P/E (X)
P/BV(X)
DIVIDEND
Company Name
(Rs.)
Rs. in mn.
(Rs.)
Ratio
Ratio
(%)
493.10
85.30
162.00
274.90
7445.81
3126.30
4896.80
13599.90
15.99
7.11
13.47
12.23
30.84
12.00
12.03
22.48
3.20
0.69
0.74
0.97
35.00
0.00
20.00
25.00
Reliance Industrial Infrastructure Ltd
SPML Infra Ltd
Gayatri Projects Ltd
Simplex Infrastructures Ltd
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q2 FY15,
Reliance Industrial Infrastructure Ltd engaged in
Months
Sep-14
Sep-13
% Change
Net Sales
237.95
206.98
14.96
computer software and data processing, reported its
PAT
54.26
58.98
(8.00)
financial results for the 2nd quarter ended 30 Sep,
EPS
3.59
3.91
(8.00)
2014.
EBITDA
89.37
97.95
(8.76)
business
of
setting
up
operating
Industrial
Infrastructure & providing services connected with
Revenue for the quarter grew by 14.96% to Rs. 237.95 million from Rs. 206.98 million, when compared with the
prior year period. EBITDA is Rs. 89.37 million in Q2 FY15 and decline of 8.76% over the prior period of previous
year. In Q2 FY15, net profit of Rs. 54.26 million against Rs. 58.98 million in the corresponding quarter of the
previous year. The company has reported an EPS of Rs. 3.59 for the 2nd quarter as against an EPS of Rs. 3.91 in
the corresponding quarter of the previous year.
Break up of Expenditure
Rs in Million
Break up of Expenditure
Q2 FY15
Q2 FY14
Employee Cost
43.77
38.51
Stores & Spares Consumed
4.23
2.89
Operating Expenses
51.89
31.91
Depreciation
27.94
24.63
Other Expenditure
70.24
48.01
Latest Updates
During H1 FY15, Total Revenue of Rs. 492.50 million an increase of 9.8% as compared to Rs. 448.40 million
in the corresponding period of the previous year. This increase due to the increase in income from product
through pipeline.
Net profit during H1 FY15 was Rs. 110.30 million from Rs. 113.50 million, a decline of 2.8% due to the
increase in operating and maintenance expenses on construction machinery and other operating assets.
Income from product transportation services increased by 38.3% from Rs. 88.90 million to Rs. 122.90 million
on YoY basis.
Income from hiring of construction machineries increased by 2.7% from Rs. 163.80 million to Rs. 168.20
million on Y-o-Y basis.
Income from IT support services increased by 1.4% from Rs. 88.80 million to Rs. 90.00 million on Y-o-Y basis.
Income from other services decreased by 1.6% from Rs. 70.30 million to Rs. 69.20 million on Y-o-Y basis.
COMPANY PROFILE
Reliance Industrial Infrastructure Limited is Reliance Group Company was incorporated in September 1988 as a
Public Limited Company in the name of "Chembur Patalganga Pipelines Limited". The Company commenced its
commercial operation in March 1992 ant the name of the Company was subsequently changed to "CPPL Limited"
in September 1992 and thereafter to its present name viz., "Reliance Industrial Infrastructure Limited" in March
1994.
Business
Reliance Industrial Infrastructure Limited is mainly engaged in the business of setting up / operating Industrial
Infrastructure. The Company is also engaged in related activities involving leasing and providing services
connected with computer software and data processing. The Company has set up a 200-millimetre dia twin
pipeline system from the Refinery of Bharat Petroleum Corporation at Mahul, Mumbai, for transporting
petroleum products like Naphtha and Kerosene to the Petrochemical Complex of Reliance Industries Limited at
Patalganga.
Reliance Industrial Infrastructure Limited has acquired & deployed the various construction machinery on hire
for use at various construction sites all over India. The Company has its operations in the Mumbai and the
Rasayani regions of Maharashtra, Surat and Jamnagar belts of Gujarat as also at other places in India.
FINANCIAL HIGHLIGHT (PARENT BASIS)
(A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2013 -2016E
I
FY-13A
FY-14A
FY-15E
FY-16E
a) Share Capital
151.00
151.00
151.00
151.00
b) Reserves and Surplus
2168.66
2345.52
2430.06
2723.04
2319.66
2496.52
2581.06
2874.04
261.92
293.13
281.40
267.33
261.92
293.13
281.40
267.33
a) Trade payables
125.50
161.92
142.49
136.79
b) Other Current liabilities
232.08
103.81
126.65
144.38
c) Short term Provisions
78.38
73.48
68.33
65.60
435.96
339.21
337.47
346.77
3017.53
3128.86
3199.93
3488.15
EQUITY AND LIABILITIES
A) Shareholder's Funds:
Sub-Total Net worth
B)
Non Current Liabilities:
a) Deferred Tax Liabilities
Sub Total - Non Current Liabilities
C)
Current Liabilities:
Sub-Total Current Liabilities
TOTAL EQUITY AND LIABILITIES (A + B + C)
II
ASSETS
D)
Non-Current Assets:
Fixed Assets
i.
Tangible assets
528.19
756.18
780.87
819.91
ii.
Intangible Assets
423.71
465.62
474.93
493.93
iii.
Capital Work in Progress
91.29
30.54
32.07
34.63
a) Sub-Total-Total Fixed Assets
1043.19
1252.34
1287.87
1348.48
67.74
871.74
958.92
1120.74
1137.34
258.43
193.82
211.26
2248.27
2382.51
2440.61
2680.48
a) Current Investments
287.50
331.00
383.96
437.71
b) Inventories
11.26
10.43
10.95
11.28
c) Trade receivables
193.97
181.14
170.27
181.08
d) Cash and Bank Balances
26.95
10.31
11.96
13.64
e) Short-terms loans & advances
249.58
213.47
182.18
163.96
769.26
746.35
759.32
807.67
3017.53
3128.86
3199.93
3488.15
b) Non Current Investments
c) Long Term loans and advances
Sub-Total Non-Current Assets
E)
Current Assets:
Sub-Total Current Assets
TOTAL ASSETS (D + E)
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn)
FY13A
FY14A
FY15E
FY16E
Description
Net Sales
12m
802.65
12m
848.32
12m
950.12
12m
1045.13
Other Income
89.54
71.16
84.68
89.76
Total Income
892.19
919.48
1034.80
1134.89
Expenditure
-436.76
-481.08
-627.08
-668.88
Operating Profit
455.43
438.40
407.72
466.01
0.00
0.00
0.00
0.00
Gross profit
455.43
438.40
407.72
466.01
Depreciation
-101.51
-102.39
-110.58
-117.22
Profit Before Tax
353.92
336.01
297.14
348.79
Tax
-110.11
-94.61
-44.57
-55.81
Net Profit
243.81
241.40
252.57
292.99
Equity capital
151.00
151.00
151.00
151.00
Reserves
1997.93
2177.49
2430.06
2723.04
Face value
10.00
10.00
10.00
10.00
EPS
16.15
15.99
16.73
19.40
Interest
Quarterly Profit & Loss Statement for the period of 31st Mar, 2014 to 31st Dec, 2014E
Value(Rs.in.mn)
31-Mar-14
30-Jun-14
30-Sep-14
31-Dec-14E
Description
3m
3m
3m
3m
Net sales
228.07
212.40
237.95
242.71
Other income
16.54
20.54
21.56
21.99
Total Income
244.61
232.94
259.51
264.70
Expenditure
-111.73
-145.03
-170.14
-154.85
Operating profit
132.88
87.91
89.37
109.85
0.00
0.00
0.00
0.00
Gross profit
132.88
87.91
89.37
109.85
Depreciation
-28.30
-27.65
-27.94
-29.90
Profit Before Tax
104.58
60.26
61.43
79.96
Tax
-37.60
-4.23
-7.17
-17.59
Net Profit
66.98
56.03
54.26
62.37
Equity capital
151.00
151.00
151.00
151.00
Face value
10.00
10.00
10.00
10.00
EPS
4.44
3.71
3.59
4.13
Interest
Ratio Analysis
Particulars
FY13A
FY14A
FY15E
FY16E
EPS (Rs.)
16.15
15.99
16.73
19.40
EBITDA Margin (%)
56.74
51.68
42.91
44.59
PBT Margin (%)
44.09
39.61
31.27
33.37
PAT Margin (%)
30.38
28.46
26.58
28.03
P/E Ratio (x)
30.54
30.84
29.48
25.41
ROE (%)
11.35
10.37
9.79
10.19
ROCE (%)
25.92
23.22
20.08
20.29
EV/EBITDA (x)
15.66
16.21
17.29
15.01
Book Value (Rs.)
142.31
154.20
170.93
190.33
3.46
3.20
2.88
2.59
P/BV
Charts
OUTLOOK AND CONCLUSION
At the current market price of Rs.493.10, the stock P/E ratio is at 29.48 x FY15E and 25.41 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.16.73 and
Rs.19.40 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 6% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 17.29 x for FY15E and 15.01 x for FY16E
Price to Book Value of the stock is expected to be at 2.88 x and 2.59 x respectively for FY15E and FY16E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.542.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
Engineering is a diverse industry with various segments. It is also the largest of all industrial sectors in India. A
company in this sector can be a power equipment manufacturer, execution specialist for engineering,
procurement and construction (EPC) or even a niche player. The engineering sector has observed tremendous
growth in recent years owing to significant investments in power generation projects and the infrastructure
sector. The power sector itself contributes about 70-75 per cent of the engineering companies' revenues.
India on its quest to become a global superpower has made significant strides towards the development of its
engineering sector. The Indian government has appointed the Engineering Export Promotion Council (EEPC) to
be the apex body in charge of promotion of engineering goods, products and services from India. India exports
transport equipment, capital goods, other machinery/equipment and light engineering products such as castings,
forgings and fasteners to various countries of the world.
Coupled with favourable regulatory policies and growth in the manufacturing sector, many foreign players have
started to invest in the country. India recently became a permanent member of the Washington Accord (WA) on
June 13, 2014. The country now joins an exclusive group of 17 countries who are permanent signatories of the
WA, an elite international agreement on engineering studies and mobility of engineers.
Market size
Driven by strong demand for engineering gods, exports from India registered a double digit growth at 10.22 per
cent to touch US$ 26.4 billion in June 2014 from US$ 24.02 billion in the corresponding month last year. This
growth can be credited to the robust expansion in shipments of aircraft, spacecraft parts and automobiles. The
second best performing sector was non-ferrous metals and metal products.
Engineering exports from India are expected to cross US$ 70 billion in FY 15 registering a growth of 15 per cent
over the previous fiscal, as demand in key markets such as the US and the UAE is on the rise. Apart from these
traditional markets, markets in Eastern and Central European countries such as Poland also hold huge promise.
India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total
exports. Recently, India's engineering exports to Japan and South Korea have also increased with shipments to
these two countries rising by 16 and 60 per cent respectively.
Government Initiatives
The Indian engineering sector is of strategic importance to the economy owing to its intense integration with
other industry segments. The sector has been de-licensed and enjoys 100 per cent FDI. With the aim to boost the
manufacturing sector, the government has relaxed the excise duties on factory gate tax, capital goods, consumer
durables and vehicles. It has also reduced the basic customs duty from 10 per cent to 5 per cent on forged steel
rings used in the manufacture of bearings of wind operated electricity generators.
The Government of India in its Union Budget 2014-15, has provided investment allowance at the rate of 15 per
cent to a manufacturing company that invests more than US$ 4.17 million in any year in new plant and
machinery. The government has also taken steps to improve the quality of technical education in the engineering
sector by allocating a sum of Rs 5000 million (US$ 81.69 million) for setting up five more IITs in the states of
Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
Steps have also been taken to encourage companies to perform and grow better. For instance, EIL was recently
conferred the Navaratna status after it fulfilled the criteria set by the Department of Public Enterprises, Ministry
of Heavy Industries and Public Enterprises, Government of India. The conferred status would give the stateowned firm more financial and operational autonomy.
Road Ahead
The engineering sector is a growing market. Current spending on engineering services is projected to increase to
US$ 1.1 trillion by 2020. With development in associated sectors such as automotive, industrial goods and
infrastructure, coupled with a well-developed technical human resources pool, engineering exports are expected
to touch US$ 120 billion by 2015.
Also, the Union Budget 2014-15 has allocated funds for several infrastructure projects which are further
expected to provide a boost to the engineering sector. The industry can also look forward to deriving revenues
from newer services and from newer geographies with Big Data, Cloud, M2M and Internet of Things becoming a
reality.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – info@firstcallindia.com
C.V.S.L.Kameswari
Pharma
U. Janaki Rao
Capital Goods
B. Anil Kumar
Auto, IT & FMCG
M. Vinayak Rao
Diversified
C. Bhagya Lakshmi
Diversified
B. Vasanthi
Diversified
G. Amarender
Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: info@firstcallindiaequity.com
www.firstcallindiaequity.com