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    RELIANCE.NS · NSI · Energy

    Reliance Industries Limited

    Also onConsensus Drift

    Implied value per share

    INR 1877.74

    Market price

    INR 1226.40

    Implied upside

    +53.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis line has no market capitalisation, which means it is not ordinary shares - typically a hybrid, preference line, note or unlisted stub. A discounted cashflow values a claim on the whole business, so applying it here attributes all of the group’s revenue to a security that has no such claim. Its value is its coupon and call schedule. Look up the ordinary line instead.
    AdjustedCapital expenditure runs at 14.8% of revenue against depreciation of 5.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    INR 1877.74+53.1%
    Exit multiple
    INR 1118.82-8.8%
    Market price
    INR 1226.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn88bn176bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 11248.2bnINR 11967.4bnINR 12732.6bnINR 13546.7bnINR 14412.9bn+6.4%
    EBITINR 1325.9bnINR 1410.7bnINR 1500.9bnINR 1596.9bnINR 1699.0bn+6.4%
    NOPATINR 1019.9bnINR 1085.1bnINR 1154.5bnINR 1228.3bnINR 1306.8bn+6.4%
    Add depreciation & amortisationINR 596.1bnINR 634.2bnINR 674.7bnINR 717.9bnINR 763.8bn+6.4%
    Less capital expenditureINR -1663.7bnINR -1770.1bnINR -1883.3bnINR -2003.7bnINR -2131.8bn+6.4%
    Less increase in working capitalINR 185.3bnINR 197.1bnINR 209.7bnINR 223.1bnINR 237.4bn-6.4%
    Free cashflow to firmINR 137.5bnINR 146.3bnINR 155.6bnINR 165.6bnINR 176.2bn+6.4%
    Discount factor0.97480.92640.88030.83660.7950-
    Present valueINR 134.0bnINR 135.5bnINR 137.0bnINR 138.5bnINR 140.1bn+1.1%
    Present Value Of The ForecastINR 685.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.432Reported 0.152, pulled toward 1.0 (Blume)
    Cost of equity10.25%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 0.000.0% of capital
    Total debtINR 3980.0bn100.0% of capital, book value as a proxy
    Tax rate23.1%Effective, capped at statutory
    WACC5.23%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 1877.74

    97% of EV

    Forecast FCFF, final year
    INR 176.2bn
    Capex at depreciation, working capital in reinvestment
    INR 1306.8bn
    Less reinvestment at g/ROIC (33.5% of NOPAT)
    INR -437.9bn
    Capitalised
    INR 868.9bn
    ROIC (reported)
    7.5%
    Terminal value, undiscounted
    INR 32621.0bn
    Terminal value, discounted
    INR 25933.7bn
    Enterprise value
    INR 26618.8bn
    Less net debt
    INR 1207.9bn
    Equity value
    INR 25411.0bn

    Exit at 8.0x EBITDA

    Value per shareINR 1118.82

    96% of EV

    Terminal value, undiscounted
    INR 19702.3bn
    Terminal value, discounted
    INR 15663.4bn
    Enterprise value
    INR 16348.5bn
    Less net debt
    INR 1207.9bn
    Equity value
    INR 15140.7bn

    Spread between methods: 51%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.23%3886.355042.627774.4722344.14—
    4.23%2342.892645.243119.233974.125992.24
    5.23%1630.291735.651877.712081.172399.24
    6.23%1221.451258.591304.361362.781440.78
    7.23%957.22965.84975.29985.86997.99

    Outlined: this model. Green text: above today's price of 1226.40. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.4%-1.0%-7.4pp
    EBIT margin11.8%8.4%-3.4pp
    Discount rate5.2%6.4%+1.2pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.