How to Invest in Reliance Shares? Is it a Good Stock for Long-Term Investment?
Reliance Industries Limited is one of the largest conglomerates in India. The company is a household name and is among the oldest corporations in the country. It is engaged in businesses across multiple segments and has delivered a strong performance in each of these verticals. Its six primary areas of operations are as follows:
- Exploration and Production – This segment primarily deals with the exploration, development, appraisal, and production of oil and natural gas. It has undertaken various joint ventures with several big players in the sector like Shell and Oil and Natural Gas Corporation Limited. It is also capitalizing on US Shale gas through working interest partnerships with Pioneer Natural Resources, Chevron, and Carrizo Oil & Gas.
- Refining and Marketing – This sector forms the second link in Reliance’s pursuit to become a global leader in energy. It mainly deals with the refining and marketing of petroleum products, which take place at the Jamnagar Refinery. It produces fuels for various applications such as domestic, industrial, aviation, transport, et cetera.
- Petrochemicals – The petrochemicals division of Reliance Industries Limited is engaged in the business of manufacturing and marketing petrochemical products like polymers, polyesters, aromatics, and fiber intermediaries. These products are used across a broad range of applications – agriculture, automotive, healthcare, housing, and many more.
- Textiles and Retail – It is well-known fact that Reliance commenced its operations with textiles and eventually forayed into other segments. With the help of its manufacturing division at Naroda, it gave rise to one of the most iconic textile brands in India – Vimal.
Similarly, Reliance Retail is another consumer-based business through which it caters to millions of customers every week. It operates a chain of convenience stores, supermarkets, and specialty stores which deal with fast moving consumer goods, apparels, electronic products, and jewelry.
- Jio and Digital Services – Reliance Jio has proven to be a gamechanger in the Indian telecommunication sector. Owing to its exceptional business model and simplified tariff plans, it managed to become the most popular mobile network in India. As of March 2018, Jio boasts of roughly 200 million subscribers. This number is likely to increase in the coming months.
Apart from this, Reliance Industries Limited is also engaged in the media business. It owns the Network 18 Group and most recently, it acquired Viacom 18’s majority shares through a joint venture.
As you can see, Reliance is engaged in a plethora of businesses and interestingly enough, it has managed to perform exceedingly well across all the verticals. This is evident from the financial performance of the company, as elaborated in the next section.
Financial Performance of Reliance Industries Limited for FY 2017-18
For the year ended on March 31, 2018, Reliance reported its consolidated turnover to be at an astounding Rs.4,30,731 crore. With respect to the previous fiscal year, this marked an increase of 30.5%. Consequently, its consolidated net profit for the year also grew by 20.6% y-o-y from Rs.29,901 crore to Rs.36,075 crore.
Considering the performance of each individual segments, the company’s refining and marketing division registered a y-o-y growth of 22% in the revenue. Similarly, its petrochemicals arm witnessed its revenues grow from Rs.92,472 crore to Rs.1,25,299 crore y-o-y. As for its exploration and production business, it remained fairly stagnant while recording a rise of just 0.3% in the income, y-o-y.
Coming to the organized retail sector, the segment revenue, in this case, was reported to be at Rs.69,198 crore. In comparison to the previous financial year, this marked a tremendous increase of 104.9%. A more astounding surge was witnessed in the Jio sector. On a y-o-y basis, its revenue grew from a Rs.599 crore to Rs.23,916 crore, effectively surpassing all expectations. In the same manner, its media business – Network18 Media & Investments Limited to be more precise – registered a growth of 23.3% y-o-y.
Furthermore, the company’s earnings per share (EPS) grew by 20.3% y-o-y from Rs.50.7 to Rs.60.9 while its debt-equity ratio was reported to be at 0.75. In addition to this, Reliance maintained its domestic credit ratings of ‘CRISIL AAA’ from the CRISIL and ‘IND AAA’ from the Indian Rating & Research Private Limited.
As for its consolidated balance sheet, the company’s total assets grew y-o-y from Rs.7,12,339 crore to Rs.8,16,348 crore. Its non-current liabilities reduced marginally from Rs.2,10,398 crore to Rs.2,05,451 crore, y-o-y.
By all measures, Reliance Industries Limited looks financially strong and fundamentally sound. With a strong leadership team at the helm of the company, it has a bright future ahead of it.
Reliance Industries Limited Stock Returns
In 2017, the Reliance Industries Limited stock price gained a little over 80% over the course of the year to deliver extraordinary gains to the investors. It is interesting to note that prior to this, the share price of Reliance remained fairly stagnant at levels below Rs.550. This meteoric surge in 2017 came on account of Jio, which took the share price from Rs.542 in January to Rs.921 in late December. In the same year, the company also announced a dividend of 110% and bonus shares in 1:1 ratio.
A similar trend is being seen in 2018 as well. The scrip commenced the year trading at levels close to Rs.911. By early June, the shares managed to cross the psychologically important mark of Rs.1,000 for the first time in its history. Not only this, but the scrip managed to find momentum at those levels. A final dividend of 60% was also announced later in the month.
Through the course of July, August, and September, the share price moved up while delivering remarkable returns. The scrip crossed the Rs.1,200 mark and eventually, the shares hit their 52-week high at Rs.1,329.
Over the course of last year or so, Reliance Industries has performed exceptionally well. Its financials have improved dramatically and the same has been reflected in its stock price. From a long-term perspective, Reliance Industries Limited makes for a good buy. However, before investing in this stock, it is strongly recommended that you research thoroughly and consult a financial planner. Find more on bankbazaar.com about latest reliance stock trends. Going through will help investor a great deal.
Its equity shares are available for purchase to the general public. In order to buy them, all you have to do is create a DEMAT and a trading account with any of the numerous stock brokers online. After you have created your trading account, simply log in and purchase the desired shares.