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Since Reliance Industries Limited (NSE:RELIANCE) released its earnings in June 2019, analysts seem fairly confident, as a 17% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 12%. With trailing-twelve-month net income at current levels of ₹396b, we should see this rise to ₹464b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for Reliance Industries
Exciting times ahead?
The longer term expectations from the 25 analysts of RELIANCE is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for RELIANCE, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of ₹396b and the final forecast of ₹588b by 2022, the annual rate of growth for RELIANCE’s earnings is 14%. This leads to an EPS of ₹99.23 in the final year of projections relative to the current EPS of ₹66.82. With a current profit margin of 6.8%, this movement will result in a margin of 8.6% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Reliance Industries, I've put together three fundamental factors you should further research:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is Reliance Industries worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Reliance Industries is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Reliance Industries? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.