<strong>Institutional</strong> <strong>Equities</strong> Core earning changing the return ratio trend The company’s earnings scene is now shifting from the stress on other income to core earnings over the period. This is reflected in the return ratios, where RoCE is showing an improving trend as cash is getting deployed in infrastructure projects which are driving up operating income and reducing other income, thereby suppressing the RoE. We expect the RoCE to improve by 120bps to 5.8% and the RoE by 80bps to 7.3% in FY13. Exhibit 26: Return ratios trend (%) 12 10 8 6 4 2 0 FY09 FY10 FY11 FY12E FY13E Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research ROE (%) ROCE (%) The company had announced buy-back of shares worth Rs10bn at a maximum price of Rs 725/share. It has already bought around 3mn shares at an average price of Rs575/share. 52 Reliance Infra
<strong>Institutional</strong> <strong>Equities</strong> Financials Exhibit 27: Income statement Y/E March (Rsmn) FY09 FY10 FY11 FY12E FY13E Net sales 125,781 146,286 151,278 186,080 221,879 Growth (%) 50.7 16.3 3.4 23.0 19.2 Total expenditure 119,482 134,022 136,297 155,351 181,822 EBITDA 6,299 12,264 14,981 30,729 40,056 Growth (%) 18.4 94.7 22.2 105.1 30.4 EBITDA margin (%) 5.0 8.4 9.9 16.5 18.1 Depreciation 3,304 4,724 4,825 7,961 9,152 Interest costs 4,394 5,251 6,350 11,378 13,314 Other income 14,774 11,188 9,752 5,687 3,450 Profit before Tax 13,375 13,476 13,558 17,077 21,041 PBTM (%) 10.6 9.2 9.0 9.2 9.5 Tax 783 1,498 1,268 4,106 5,161 Reported PAT 12,591 11,978 12,290 12,971 15,879 Growth (%) 10.4 (4.9) 2.6 5.5 22.4 RPAT (post minority share) 13,532 15,194 15,516 16,201 19,432 Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research Exhibit 29: Balance Sheet Y/E March (Rsmn) FY09 FY10 FY11 FY12E FY13E Equity capital 2260.7 2449.2 2674.7 2674.7 2674.7 <strong>Share</strong> warrants 7834.9 5410.8 - - - Reserves & surplus 158,880 199,181 233,401 247,357 264,544 Net worth 168,976 207,041 236,076 250,032 267,219 Minority interest 1116 1146.8 1876.4 1876.4 1876.4 Long -term loans 46,215 57,490 94,695 98,116 101,132 Short-term loans 54838.5 28349 28356.7 28356.7 28356.7 Total loans 101,054 85,839 123,052 126,473 129,489 Deferred tax (liability) /assets 2113.4 1569.4 987.9 987.9 987.9 Total liabilities 273,259 295,596 361,992 379,369 399,572 Gross block 101,074 117,482 143,967 211,770 242,681 Less: Depreciation 46,380 51,683 56,508 64,469 73,621 Net block 54,694 65,799 87,459 147,301 169,060 Capital WIP 35,582 46,387 100,301 77,498 85,248 Investments 159364.1 136591.4 137939 124145.1 111730.59 Current assets 95,695 132,399 182,150 197,132 225,686 Inventories 5,606 3,898 4,255 5,098 6,079 Sundry debtors 19,278 22,496 73,000 63,726 75,986 Cash and bank balances 4,583 4,494 6,357 13,475 14,671 Other current assets 10,775 15,605 18,653 20,518 22,570 Loans and advances 55,453 85,906 79,885 94,315 106,380 Current liabilities and provisions 72,077 85,580 145,857 166,707 192,153 Current liabilities 59,129 70,421 132,381 152,943 176,287 Provisions 12,949 15,159 13,476 13,765 15,866 Net current assets 23,618 46,819 36,292 30,424 33,533 Total assets 273,259 295,596 361,992 379,369 399,572 Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research Exhibit 28:Cash flow Y/E March (Rsmn) FY09 FY10 FY11 FY12E FY13E EBIT 2,995 7,539 10,156 22,768 30,904 Inc./(dec.) in working capital (2,530) (13,265) (13,401) 12,985 (1,912) Cash flow from operations 464 (5,726) (3,245) 35,753 28,992 Other income 11,877 8,341 10,895 17,065 16,764 Depreciation 3,304 4,724 4,825 7,961 9,152 Interest paid (-) (4,394) (5,251) (6,350) (11,378) (13,314) Tax paid (-) (2,072) (404) 326 (4,106) (5,161) Dividends paid (-) (1,701) (2,005) (1,849) (2,245) (2,245) Net cash from operations 7,478 (321) 4,602 43,051 34,188 Capital expenditure (-) (24,948) (22,047) (78,701) (45,000) (38,661) Net cash after capex (17,470) (22,369) (74,098) (1,949) (4,473) Inc./(dec.) in borrowing 16,459 12,918 55,025 3,422 3,016 (Inc./(dec. in investments 3,837 9,329 20,272 5,645 2,653 Equity issue/(buyback) 603 33 665 - - Cash from financial activities 20,899 22,280 75,961 9,067 5,669 Change in cash 3,429 (88) 1,863 7,117 1,196 Opening cash 1,154 4,583 4,494 6,357 13,475 Closing cash 4,583 4,494 6,357 13,475 14,671 Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research Exhibit 30:Key ratios Y/E March FY09 FY10 FY11 FY12E FY13E EPS 51 57 58 61 73 Cash EPS 63 74 76 90 107 Valuations PE ratio (x) 8.5 7.5 7.4 7.1 5.9 Price/sales (x) 0.8 0.7 0.8 0.6 0.5 Price /CEPS (x) 6.8 5.7 5.6 4.7 4.0 Price /BV (x) 0.7 0.6 0.5 0.5 0.4 EV/sales (x) 0.3 0.8 1.0 0.9 0.8 EV/EBITDA (x) 5.4 9.3 10.5 5.5 4.5 EV/EBIT (x) 11.3 15.2 15.5 7.4 5.9 Margins (%) EBITDA margin 5.0 8.4 9.9 16.5 18.1 EBIT margin 2.4 5.2 6.7 12.2 13.9 PBT margin 10.6 9.2 9.0 9.2 9.5 Net margin 10.8 10.4 10.3 8.7 8.8 Returns (%) RoCE 1.0 2.3 2.5 4.6 5.8 RoNW 8.0 7.3 6.6 6.5 7.3 Efficiency ratios Asset T/O 0.5 0.5 0.4 0.5 0.6 Fixed asset T/O 1.2 1.2 1.1 0.9 0.9 Dupont NPM (PAT/sales) 0.11 0.10 0.10 0.09 0.09 Total asset T/O 0.46 0.49 0.42 0.49 0.56 Equity multiplier 1.62 1.43 1.53 1.52 1.50 Gearing ratios Net debt/equity (x) (0.4) 0.05 0.2 0.2 0.3 Total debt/equity (x) 0.6 0.4 0.5 0.5 0.5 Debt / EBITDA (x) 16.0 7.0 8.2 4.1 3.2 Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research 53 Reliance Infra
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