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Reliance Industries’ Road Map to a Become Zero Net-Debt Company

Reliance Industries AGM | Key Highlights

Reliance Industries’ Road Map towards a Zero Net-Debt Company by 31st March, 2021


Reliance Industries Ltd’s 42nd AGM held today. Lets discuss the key highlights of the AGM 2019 and the company’s road map towards a zero-net debt company by 31st March, 2021.

Reliance Industries Ltd AGM 2019 Key Highlights

Reliance Industries Ltd (RIL) is the only diversified Indian enterprise with 3 major growth engines in one single corporate entity :

  1. Oil-to-chemicals division
  2. Reliance Jio
  3. Reliance Retail

All 3 have done exceedingly well in the past years.

Lets see the key highlights of Reliance Industries AGM 2019 announced by the Chairman and Managing director of Reliance Industries Ltd Mr.Mukesh Ambani.

1.Reliance Oil-to-Chemical

  • RIL is having most comprehensive and integrated oil-to-chemicals (OTC) business.
  • Saudi Aramco and RIL have agreed to form partnership will invest in RIL for 20% stake in oil-to-chemical business with an enterprise value of $75 billion or over 5.3 lakh crore. Saudi Aramco will supply 500,000 barrels of oil to Jamnagar refinery. It is one of the largest Foreign investment in India.
  • JV with BP will invest Rs 35,000 crore in KG-D6. Focusing on augmenting production of methane; partnership with BP will help here. Reliance to get Rs 7,000 Cr by selling 49% stake in its Fuel-Retail business to BP.
  • Oil to chemicals business achieved revenue of Rs 5.7 lakh crore, exports of Rs 2.2 lakh crore.
Detailed Stock Analysis by Invest Yadnya

2.Reliance Jio

  • Reliance Jio Crossed 340 Million Subscriber Mark  Jio become the world’s fastest growing digital player; it is larger than all other major retail business put together.
  • Jio fibre plans will be priced between Rs 700 to Rs 10,000 per month. 
  • Voice calls from home to any network will be free. International pack for calls to US/Canada at Rs 500 per month. 
  • Jio first day first show will be launched in middle of 2020 
  • Reliance Jio fibre customers who opt for annual lifetime plans will get an LED 4k HD TV and set top box free.
  • Jio will install a blockchain network across India 
  • Jio announces partnership with Microsoft to accelerate digital transformation of India 
  • IoT services to be available from Jan 1, 2020 
  • Jio fibre roll out within next 12 months 
  • Jio launches Jio set top box 
  • Reliance Jio’s customer base crossed 340 Mn and more than 10 Mn new customers every month are being added. 
  • Jio has invested 3.5 lakh crore in digital infrastructure.  Because of early adoption to LTE tech, our wireless is 4G ready and can upgrade it to 5G.

3.Reliance Retail

  • Reliance Retail crossed turnover Rs 1.3 lakh crore to be largest retail company.
  • Reliance’s Consumer business – Jio and Retail verticals bring in 34% of consolidated EBITDA from 2% in last 5 years.
  • Reliance Jio and Reliance Retail are proposed to be get listed in next 5 years.

4.Reliance Industries’ 4 New Revenue Engines

Reliance is to start 4 more engines to generate revenues: 

  1. Internet of Things all over India
  2. Home Broadband
  3. Enterprise broadband
  4. Broadband for small and medium businesses
 Reliance Industries AGM 2019
Reliance Industries AGM 2019 | Key Highlights

5.Road Map towards zero net-debt company

  • Reliance Industries aims to become zero net-debt company in next 18 months, by 31st March 2021.
  • Reliance’s Consumer business – Jio and Retail verticals bring in 34% of consolidated EBITDA from 2% in last 5 years.
  • Reliance Industries’ Rs. 5.4 Lakh crore investments over the last 5 years will generate EBITDA in excess of $ 1 billion annually for over a decade.
  • Thus, based on the new and existing growth engines, Reliance Industries can grow EBITDA by 15% annually over the next 5 years.
  • According to this growth rate, consumer business’s share soon will be 50% of Reliance Industries’ consolidated EBITDA.
  • Company will reward shareholders abundantly with bonus issues and higher dividends, once the company is debt-free.
SBI Q1 FY20 Results

SBI Q1 FY20 Results – 5 Point Analysis

SBI Q1 FY20 Financial Highlights


In this article, we will see 5 Point Analysis of SBI Q1 FY20 Results released on friday, 2nd August 2019. In this analysis, we have covered Q1 FY20 Results, Advances and Deposits, NIM, NPAs and current valuation of the bank etc.

SBI Q1 FY20 Results – 5 Point Analysis

1.SBI Q1 FY20 Results Update

SBI Q1 FY20 Results- 5 Point Analysis
SBI Q1 FY20 Results – 5 Point Analysis
  1. Net Interest Income (NII)
    • NII is the differance between interest earned on advances and interest expenses of deposits of the bank. It is considered as a core source of income of the bank.
    • NII is increased by 5.23% Y-o-Y but decreased by 0.07% Q-o-Q.
  2. Total Income
    • With the decrease in the other income by almost 37% Q-o-Q, the total income numbers are eroded by 7% Q-o-Q but improved by 8% Y-o-Y.
    • Thus, the bank’s performance was better in Q4 FY19 in terms of NII and other income than Q1 FY20.
  3. Operating Profit
    • Muted growth in core fee income and higher operating expenses led to a miss the operating profit expectations.
    • Operating profit has increased 10.6% Y-o-Y but decreased by 21.6% Q-o-Q due to decreased total income and increased total expenditure.
  4. Provisions for NPAs
    • SBI made a provision of Rs.11,648 Cr in Q1 FY20 for DHFL exposure, which includes 25% provisioning on bonds and 7.5% provisioning on loans (included in standard asset provisions).
    • The bank also made of standard asset provisions on a renewable energy account (Suzlon) in the quarter.
  5. Net Profit
    • After making provisioning from operating profits and paying tax, net profit numbers come. Decreased provisioning Q-o-Q as well as Y-o-Y has supported the Net profit numbers boost by 175.9% Q-o-Q.
    • The bank has reported net profit of Rs.2,312 Cr in Q1 FY20 against a loss of Rs.4,875 Cr in Q1 FY19.

2.Advances and Deposits

SBI Q1 FY20 Results – Balance sheet Summary and Key Ratios
SBI Advances & Deposits Mix Q1 FY20
  1. Advances
    • Out of the total advances for Q1 FY20 are Rs.22.38 Lakh Cr out of which around 28% advances are domestic retail type and domestic corporate loans contributes 37% of the gross advance book. 62% of the retail loans are the home loans.
  2. Deposits
    • Total Depoists for Q1 FY20 is Rs.29.48 Lakh Cr out of which, around 47% deposits accounts to CASA and the rest 53% deposits are Retail Term Deposits(RTDs).
    • Savings deposits and RTDs are comparatively sticky kind of deposits maintained with the bank. It can be a poistive sign for the bank.
    • On further break-up of CASA contributes to 12.84 Lakh Cr While RTDs contribute to Rs.15.66 Lakh Cr.
    • CASA number should surpassing RTDs contribution in order to lower the interest expenses of the bank. Since, bank requires to offer lower interest rates on CASA deposits than RTDs.

3.Net Interest Margin (NIM)

  • Domestic NIMs were sequentially flat at 3.01% in Q1 FY20 from 2.95% in Q1 FY19 (+6 basis points Y-o-Y), while foreign NIMs continued to decline 1.18%.
  • Even if Q1 FY20 quarter end balances fell by 2.3% Q-o-Q, Yield on advances moved up by almost 7 basis points Q-o-Q (~8.6%) on account of higher average balances.
  • NIM is expected to improve to 3.05% by FY21E, led by the rising share of higher yielding loans and better pricing power.
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  • After a strong Q4FY19, Q1 FY20 saw a broad based rise in slippages.
  • Slippages increased sharply in Retail and Agriculture in the quarter Q1 FY20. Slippages came in higher than anticipated at Rs.17,000 Cr, largely driven by :
    1. Agri NPAs (seasonally weak plus abnormally higher slippages in Maharastra
      contributing 50% to agri slippages) and
    2. SME slippages
  • Corporate slippages were at Rs.5400 Cr, largely contributed by techical slippage of Ratnagiri Gas (Rs.2000 Cr).
  • Gross NPAs are at stable to 7.53% in Q1 FY20 as well as in Q4 FY19. While Net NPAs is increased to 3.07% from 3.01% Q-o-Q. But there is a significant decrease in the Gross and Net NPA numbers Y-o-Y.
  • Provision coverage ratio is also improved to 79.34% in Q1 FY20 from 78.7% in Q4 FY19 and 69.25% in Q1 FY19. It shows bank has well covered its non-performing assets.

5.Valuation Update

Key Risks for SBI
  • Macroeconomic risk is the biggest risk for SBI, given its size and exposures. General economic slowdown, lower IRRs on projects, slackened risk appetite constitute the overall macroeconomic risk. General activity slowdown could adversely impact performance as SBI is a proxy to the economy.
  • Deepening geographic penetration by newer private sector banks can lead to faster than expected decline in SBI’s market share.
Valuation Update
  • Before the announcement of Q1 FY results, market capitalisation of SBI was around Rs.2.83 Lakh Cr with PE ratio of almost 35.17. After releasing the results, the market cap of the bank has fallen to Rs.2.67 Lakh Cr. with PE ratio of 33.29.
  • Despite the disappointment in asset quality, it is estimated that core ROA and ROE may improve in coming 4-5 quarters led by the improvement in NIM, controlled expenses and reduction in stressed asset formation.
  • The value embedded in non-banking subsidiaries is stabilising and scalable. Listing of profitable subsidiaries like SBI Cards can also improve the valuation of the SBI.
  • The Net profit of SBI (standalone) is estimated at around Rs.23,000 Cr for FY20 with the estimated earnings per share (EPS) to be almost Rs.25 per share. As a result of increase in the EPS numbers, the PE ratio of the stock will come down up to 9-11, with the expected correction in the stock in FY20 according to the current valuation.

VG Siddhartha CCD Founder Story from Financial Angle

VG Siddhartha – Cafe Coffee Day Founder Story (Financial Angle)

Lessons for Retail Investors to be learnt from Cafe Coffee Day Financial Analysis


In this article, we are going to discuss VG Siddhartha – Cafe Coffee Day Founder news and its analysis from a financial perspective. Lets also see the lessons to be learnt from the story for Retail Investors.

VG Siddhartha – Cafe Coffee Day Founder Story (Financial Angle)

VG Siddhartha CCD Founder Story from Financial Angle
Cafe Coffee Day Stock and Company Financial Analysis

Current news of VG Siddhartha

  • VG Siddhartha, popularly known as the Coffee King of India, left everyone baffled after he went missing from a river bridge near Mangaluru on Monday night, July 29, 2019.
  • You must have already read the news – The body of Cafe Coffee Day founder VG Siddhartha has been found by local fishermen in the Nethravathi river early wednesday morning, July 31.
  • The CCD owner reportedly wrote a letter to the Café Coffee Day family stating the reasons that drove him to take the extreme step.
    • In the letter, whose authenticity is under suspicion, the CCD promoter said that it was getting difficult for him to continue under the prevailing conditions and that the pressure had become too much on him.
    • He referred to Private Equity player that had forced him to buy back shares for which he had borrowed money from a friend.
    • He also alleged harassment at the hands of a former Income Tax official.

Business Outlook

  • Mr Siddhartha’s family has been in the coffee business for more than 130 years.
  • On taking it over, VG Siddhartha set up the Cafe Coffee Day chain in 1996 and also became one of the world’s biggest coffee traders, as well the as owner of Asia’s biggest coffee plantation.
  • He owned about 30,000 acres of plantations and his Amalgamated Bean Company (ABC) is India’s largest exporter of green coffee.
  • Cafe Coffee Day has more than 1,700 stores, mainly in India, but also in Malaysia, Egypt, Czech Republic and Austria. 
  • The IPO of Coffee Day Enterprises Ltd was launched in 2015 and the company was listed on BSE and NSE on November 2, 2015. The intensions behind IPO was mainly Raising the funds for :
    • Repayment of existing debts to reduce the debt pressure
    • Expansions and opening of new outlets
  • Siddhartha and his group firms held a 53.93% stake in the company, of which 75.70% was pledged as of June 30.

Coffee Day Enterprises’ Debt Ratio Analysis

  1. The company was having a total debt of Rs.6,328 Cr and the total funds raised through IPO was Rs.1,150 Cr which can be used for repayment of debts.
    • The company was raising funds through short-term debts, launching commercial papers and continue to for their successive renewals. So there were no proper plans for repayment of debts.
    • As on March 2019, the company’s total revenue was Rs.4,264 Cr. and net profit was almost Rs.143 Cr. It means profitability of the business was also going well.
    • However, even after 4 years, Cafe Coffee Day had total borrowings of Rs 6,547 Cr as of March 31, 2019, up 30% from the previous financial year.
  2. In between, VG Siddhartha had sold his stake in mindtree the details of which will be released in June 2019 results.
  3. Debt to Equity :
    • D/E ratio of the company is 2.59. It means for every Rs.100 raised through equity, the promoters have raised a debt of Rs.259.
    • Thus, D/E ratio of the company is far more than 1, which is not a poistive sign for the company.
  4. Interest Coverage Ratio :
    • Whenever D/E ratio is more than 1, we should analyse company’s interest coverage ratio. In general, interest coverage ratio of the company should be kept above 2.5, but it is having ratio 1.25 which is too lower than the allowable limit.
    • Because interest coverage ratio below 2.5 states that the company is paying only interest payment part and not in a position to repay the principal repayment from its operating profits or EBITDA.
    • We should keep a track of company’s interest coverage ratio trend, whether it is increasing or going down in successive quarters. In case of Coffee Day Enterprises, interest coverage ratio was consistently going down Q-o-Q, which signalled the rising debt pressure for the company.

Liquidity Crunch after NBFC crisis

  • After IL&FS crisis, fund raising had become a tough process. CCD is severely affected by the slowdown in the economy and liquidity crunch after NBFC crisis.
  • In addition to it, VG Siddhartha’s offices were raided by income tax officers in September 2017. All these reasons invited a big trouble for CCD for raising new funds from lenders.
  • Key Lenders : VG Siddhartha had borrowed from Aditya Birla Finance, Kotak Mahindra Bank, AK Capital, STCI Finance, APAC, RBL Bank and SSG Asia against pledged shares of the listed firm.  Apart from NBFCs, banks like Axis Bank, Yes Bank and RBL Bank is having exposures to Coffee Day Enterprises.
  • For liquidity problems reason, VG Siddhartha was in a great need of cash and thus sold his stake in Mindtree to L&T for around Rs.2,100 Cr. Details of the deal will be included in company’s June 2019 results.
  • After income tax raid, many private equity investors have shown disinterest for the company and ask regarding the buyback of their shares. So VG Siddhartha was carrying a lot of pressure of buyback of shares.
  • The Coffee Day enterprises Ltd stock has fallen 20-30 percent in successive 2 sessions 29 and 30 July.
  • Though having Rs.12,000 Cr worth assets with VG Siddhartha, the debt repayment of worth Rs.6,547 Cr could not be managed due to failure in creating liquidity. VG Siddhartha set an Asset-rich but poor-liquidity example. He owned about 30,000 acres of coffee plantations. If almost 70-80 percent of the working capital is going into the assets like real estate investment then it is a matter of liquidity concern for the company.
  • The business should execute and follow the asset light model like RIL in case of Reliance Jio. The working capital should be managed by properly so as to retain sufficient liquidity with the company.

Detailed Stock Analysis of Muthoot Finance

Muthoot Finance – 5 Point Stock Analysis

Detailed Stock Analysis of Muthoot Finance


In this article, we are going to discuss 5 point stcok analysis of Muthoot Finance. Lets analyze the stock based on its current statistics, shareholding pattern, geographical presence, loan book and NIM, NPA provisioning etc.

Muthoot Finance – 5 Point Stock Analysis

1.Current Statistics

Muthoot Finance Ltd. is India’s largest gold financing company in terms of loan portfolio. It is trusted pan-India brand in the gold loans sector which has revolutionised India’s gold banking.

  1. Presence in 29 States/Union Territory with 4500+ pan-India branches.
  2. Gold Security :
    • Muthoot finance provides personal and business loans secured by gold jewellery, or Gold Loans.
    • So it is having total 169 tonnes of gold/ gold jewellery kept as security. Thus, the company is having a gold portfolio close to Rs.59,000 Cr or $8.4 Billion.
  3. Loan Portfolio :
    • It is the largest gold financing company in India in terms of loan portfolio. Total loans are around Rs.34,246 Cr out of which loans amounting hardly Rs.660 Cr are other typr of loans. And the remaining loans of Rs.33,585 Cr are gold loans.
    • Thus, we can see that the company has securitised its loan book of Rs.33,585 Cr by Rs.59,000 Cr gold security. So major portion of loan book is securitized loan book, which is a great advantage for the company.
  4. Retail Investor Base :
    • The company is having 1 Lakh+ retail investor base across the debenture and subordinated debt portfolio.
  5. Rating :
    • Crisil Rating for Muthoot Finance’s subordinated debt is AA with stable outlook, which indicates its high Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.
    • Thus, Muthoot Finance does not find any problems for raising funds.

2.Shareholding Pattern

Muthoot Finance Shareholding Pattern
Muthoot Finance Shareholding Pattern
  • Out of the promoters’ shareholding of 73.49%, not a single share is pledged, which is a very positive sign for the company.
  • FIIs holdins have been growing at 10-15% every quarter since last 4 quarters. It shows the confidence the foreign investors are having for the company’s business.

3.Geographical Presence

Muthoot Finance is originally a south India based company.

Muthoot Finance - 5 Point Stock Analysis
Muthoot Finance – 5 Point Stock Analysis
  • Rural India accounts for about 65% of total gold stock in the country. Large portion of the rural population has limited credit access. Therfore, Muthoot Finance is aimed at catering to under-served rural and semiurban markets through strong presence.
  • The comany is having a diversified gold loan portfolio across India. That is its geographical spread is very good.

4.Loan Book & Net Interest Margin(NIM)

  • Loan Book :
    • Total loan book of the company is Rs.34,246 Cr, out of which Rs.33,585 cr are gold loans and Rs.660 Cr comes under other types of loans. And company’s focus continued to be on gold loan.
    • Interest income on average loan asset is 21.63%. It means muthoot Finance charge interest rate of 21.63% on the gold loans since these are generally short-term or emergency loans availed from the company. The repayment of the amount is within specified short-term durations.
  • Net Interest Margin :
    • As a result of short-term high interest laons availed bt the company, the net interest margin is comparatively high, almost around 14.3% in case of gold loans.
    • So, the comapny is having an added advantage on account of higher NIM on its loan portfolio.

5.NPA Provisioning

  • The comapny is having gold assets of Rs.52,000 Cr, while the total loans of Rs.34,246 Cr are availed. So we can see that the Muthoot finance have more than one and half of the security. This is a big advantage with the company.
  • Thus there is 0 Rs allocation for NPA provisioning. This is the greatest advantage and positive side for the company.
  • The stock has grown almost 40%-50% since last 1 year.
ICICI Bank Key Highlights of Q1 FY20

ICICI Bank Q1 FY2019-20 Result Review

ICICI Bank Q1 FY20 Results Key Highlights


In this article, we will see ICICI Bank Q1 FY2019-20 results key highlights. The bank has reported net profit of Rs.1,908 Cr in Q1 FY20 against loss of Rs.119 Cr in Q1 FY19 (for June quarter last year).

ICICI Bank Q1 FY2019-20 Results

ICICI Bank Q1 FY2019-20 Results
ICICI Bank Q1 FY2019-20 Results
  • Net Interest Income (NII) : NII grew by 21.7% Y-o-Y and by 4% Q-o-Q. NII growth was supported by sustained loan growth (market share gain) along with sustained NIM.
  • Non-Interest Income : It is lowered by 11% Y-o-Y and 5.4% Q-o-Q mainly led by lower growth in advances. Non-interest income numbers has decreased due to muted fee income.
  • Total Net Income : It has seen a growth of 15.2% Y-o-Y and 2.3% Q-o-Q.
  • Operating Profit : It is improved marginally by 8.2% Y-o-Y to Rs.6,288 Cr in Q1 FY20. Operating profit growth is mainly subdued due to muted growth of non-interest income in Q1 FY20.
  • Provisions : Provisions are reduced Y-o-Y by 41% to Rs.3,495 Cr in Q1 FY20 from Rs.5,971 Cr in Q1 FY19. Provisions were lowered for Q-o-Q by 36% inspite of improvement in provisioning coverage ratio (PCR) on asset quality which is a positive sign for the bank.
  • Net Profit (PAT) : Lower Y-o-Y and Q-o-Q provisioning has improved Net profit numbers. The bank has reported net profit of Rs.1,908 Cr in Q1 FY20 against loss of Rs.119 Cr in Q1 FY19 (for June quarter last year). Also, Net profit is grown by 97% Q-o-Q compared with Q4 FY19 results.

ICICI Bank Balance Sheet Summary

Advances, Deposits & CASA Growth
  • For Q1 FY20, Advances, Total Deposits and CASA deposits have seen a Y-o-Y growth of 14.7%, 20.8% and 8.2% respectively as compared with the respective numbers in Q1 FY19.
  • While if the Q-o-Q growth is considered, Advances and Total Deposits have increased by 1% and 1.2% respectively. And CASA deposits is decreased by 8.4% Q-o-Q.
Advances Mix
  • Retail growth remained strong at 22% Y-o-Y, with its share now at 61% of loans
  • The share of unsecured loans at 8%, leading to healthy domestic growth 18% Y-o-Y.
  • Within retail, mortgages, PL/Cards, CV and Business Banking have been growing at a faster pace, while the bank has slowed down in car and dealer funding businesses.

Key Balance Sheet Ratios

  1. Gross NPA & Net NPA : In Q1 FY20, Gross NPAs is increased by 25bps Q-o-Q to 6.45% from 6.70% in Q4 FY19, while Net NPAs declined by 29bps QoQ to 1.73% from 2.06%.
  2. Provision Coverage Ratio (PCR) : The Bank raised its Provision Coverage Ratio (PCR) by 340bps QoQ to 74% as on Q1 FY20 from 70.6% in Q4 FY19 and 54.1% in Q1 FY19.
  3. Capital Adequacy Ratio (CAR) : CAR has eroded to 16.19% in Q1 FY20 from 18.35% in Q1 FY19 and 16.89% in Q4 FY19. It is not a appreciating sign for the bank.
  4. Net Interest Margin (NIM)
    • NIM was improved 42bps Y-o-Y at 3.61% Q1 FY20 from 3.19% in Q1 FY19 and lowered on Q-o-Q comparison.(3.72% in Q1 FY19).
    • The bank has recently reduced MCLR by 10bps, while Term Deposits rates by 20bps in the high-end bucket, which should support core NIMs.


  • On the positive side, the bank claims that its exposure to stressed corporates recently in news remains limited due to its de-bulking strategy, while negligence in retail are lower than industry trends.
  • The bank could meaningfully benefit from long-due uneven or bulging corporate resolutions, leading to a further reduction in NPAs.

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