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In March 2018, Reliance Industries Limited (NSEI:RELIANCE) released its most recent earnings update. Generally, analysts seem fairly confident, as a 19.13% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 10.02%. By 2019, we can expect Reliance Industries’s bottom line to reach ₹429.76B, a jump from the current ₹360.75B. Below is a brief commentary around Reliance Industries’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. Check out our latest analysis for Reliance Industries
How will Reliance Industries perform in the near future?
Longer term expectations from the 24 analysts covering RELIANCE’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of RELIANCE’s earnings growth over these next few years.
From the current net income level of ₹360.75B and the final forecast of ₹552.34B by 2021, the annual rate of growth for RELIANCE’s earnings is 13.58%. This leads to an EPS of ₹86.96 in the final year of projections relative to the current EPS of ₹60.94. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, RELIANCE’s profit margin will have expanded from 8.84% to 9.83%.
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 key 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!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.