Quarterly Results (Part 6) : Reliance, Steel Sector and More

Quarterly results are on the roll and they are making a bigger impact on the Indian Stock markets. During this event we have the result declaration of the mighty mammoth of Indian Stock Market (Reliance Industries). With this one of the major steel companies also posted their results (JSW Steel). Yes bank also presented their quarterly data and their share movement has had a drastic impact on the investors. However we will analyse and look through all these events in detail.

Reliance

The Mukesh Dhirubhai Ambani Group led Reliance Industries is the biggest company in India based on market capitalization. The share prices of the company are trailing at 2430 Rs and different analyst firms have their perspective on the further move on this share.

The results of this year’s quarter have not been at all satisfactory for the investors and Dalal Street. The company’s profit figures fall by 15% to 15792 Crore Rs on a YOY Basis. The street estimates for the same were much higher which made the company to fail the investor’s expectations and the analyst’s prediction. On the other hand the revenue figures were up by 15.3% at 2.20 Lakh Crore Rs. When the profit figures are down by 15% on a YOY basis, the EBITDA is 13.5% more than the previous year’s quarter. This was roughly around 38500 Crore Rs. The same figure is above the expectations of the analyst on Dalal Street.

Announcements and Brokerage Firm’s Review

One of the major announcements made by the board is the declaration of issuing 20000 Crore Rs of Non-Convertible debentures for raising money. To segregate the segment revenue and net profit of the Reliance businesses, Oil to Chemicals business saw a 10% rise in revenue at 1.44 Lakh Crore Rs. This is the major source of revenue of the company as well. It is close to 65% of the entire revenue. On the other hand Reliance Ventures noted a 6.2% growth in profits at 2400 Crore Rs. The revenue of the same increased by 17% to 67623 Crore Rs.

Regardless of the profit slump, major brokerage and analyst firms are bullish on the stock. Firms such as Motilal OSwal, Jefferies, Prabhudas Lilladher, Nomura, JP Morgan etc. have maintained a buy rating for the firm. The target set by all of them is somewhere in the range of 2800 Rs to 3100 Rs.

JSW Steel

The company is one of the major pioneers in the steel segment. It is a benchmark for the other firms in the sector. With a huge surprise the profit of the company went down by 89% and reported around 490 Crore Rs. The same for the last year’s quarter was 4357 Crore Rs. On the other hand the revenues were up by 2% on a YOY basis to 39314 Crore Rs. The estimate for the profit was around 890 Crore Rs which is more than 1.75 times than the achieved results.

The production of the steel has increased at 17% YOU to 6.24 Million Tons. The EBITDA was 4547 Crore Rs however the margins were substantially lower at 11.6%. The sale of steel was up by 24% than the previous year’s quarter qt 4.95 Million tons. The debt to equity ratio of the firm was at 1.09x. The management assured the investors that this quarter and the next one too would see a growth in company’s profits due to the high demand levels rising from rural areas. Alongwith this the company is bullish on the sales figures despite the economic situation around the world.

Yes Bank

One of the most trending banks of the year reported a profit decline of 80% on a YOY basis. The profit was recorded at 50 Crore Rs. This figure is low comparing the overall growth and results reported by other banks in this quarter. The Non Performing Assets of the company went down to 2% from a major 14.7% on a YOY basis. The Net NPAs were at 1% from 5.3% a year ago. Hence the bank is gaining a grip on the lost investments which is good news for the investors. However the NII was also up by 11.7% on a YOY basis. 

The major event headed towards the bank is the end of the lock-in period of the major banks that had invested in it during the times of its downfall. This can cause a major volume change which could affect the share valuation of the firm. The major reason for the decline in profit is the high operating costs from the previous quarters. The same is up by 25% this time to 2200 Crore Rs. The total deposits in the bank are also up by 15.9% at 2.13 Lakh Crore Rs. Net advances are also higher than the previous year’s quarter at 1.94 Lakh Crore Rs. During this quarter Yes bank raised nearly 8900 Crore Rs from Advent group and Carlyle. Post the result announcement the share price of the company went down by 8% to 18.15 Rs per share.