RIIL: High On Topline, Low On Margins

Reliance Industrial Infrastructure (RIIL) announced its Q4FY13 results post market hours on April 10, 2013. The numbers saw a polarised trend as a result of a tremendous growth in revenues and a massive hit on the margins.

In Q4FY13, revenues of RIIL increased by 48.18% to Rs 23.33 crore, as compared to Q4FY12. However, growth in the same period in EBIT and net profit came in at a relatively petty 4.96% and 6.95% respectively. This translates to a decline of 1123 basis points in the EBIT margin to 27.28% and 1103 basis points in the net profit margin to 28.59%.

The above trend was not exceptionally existent for Q4FY13, but for the year ended March 2013 as well. In FY13, RIIL’s revenues grew by 30.85% to Rs 80.27 crore. However, the EBIT margin and net profit margin saw a reduction of 396 basis points and 812 basis points respectively.

RIIL is mainly engaged in the business of setting up industrial infrastructure. Laying of a pipeline system for a refinery, construction of a jackwell and cathodic protection system and acquisition and deployment of construction machinery on hire at construction sites have been among the projects that RIIL has carried out.

On results announcement, RIIL also recommended a normal dividend of Rs 3.50 per share and an additional special dividend of Rs 0.25 per share in view of the 25^th year of the company. Shares of RIIL reached an intraday high of Rs 386.70 per share, higher by 1.87%.