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Reliance Naval and Engineering Ltd Stock Analysis

Small Cap
Evaluated by 1747 users | BSE: 533107 | NSE: RNAVAL |
Shipping
Pipavav Shipyard, now known as Pipavav Defence and Offshore Engineering company  was originally incorporated as Pipavav Ship Dismantling and Engineering Limited on October 17, 1997 under the Companies Act, 1956, as amended. Pursuant to a special resolution of the shareholders of the...

Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
Financial track record gives insight into the company's performance on key parameters over the past ten years. MoneyWorks4me’s proprietary colour codes make it easy for retail investors to gauge the company’s past performance.
Reliance Naval and Engineering Ltd has not performed well majority of the past ten years indicating its past ten year financial track record is not good
Value Creation
 Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19Mar'20
Return on Capital Employed 3.34%4.5%5.19%6.15%0.05%-2.01%-1.38%-3.5%-64.16%-144.64%
Growth Parameters
Growth Parameters Colour Code Guide
Net Sales (Rs. Cr.) 8601,8672,5862,27983130651933518075.5
Y-o-Y Gr. Rt.-117.1%38.5%-11.9%-63.5%-63.2%69.4%-35.4%-46.3%-58.1%
Adjusted EPS (Rs.) 0.440.240.421.57-4.25-6.93-7.25-11.38-58.92-21.19
Y-o-Y Gr. Rt.--45.5%75%273.8%-370.7%NANANANANA
Book Value per Share (Rs.) 25.2328.0529.1731.7430.1823.0215.93.02-139.08-161.06
Adjusted Net Profit 29.116.629.3115-313-510-533-839-4,346-1,563
Net Op. Cash Flow (Rs. Cr.) -500-623610942448-610-335-245-258-1,253
Debt to Cash Flow from Ops -4.04-4.837.855.4714.13-12.55-26.12-40.28-42.24-9.66
Standalone financials take only the parent company into account while consolidated financials take into account financials of the parent company as well as of all its subsidiaries. In most companies consolidated financials should be used for analysis.
Reliance Naval and Engineering Ltd. should be analysed on a Standalone basis
CAGR
CAGR Colour Code Guide
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales -23.7%-38.1%-47.4%-58.1%
Adjusted EPS -253.8%NANANA
Book Value per Share -222.9-239.8-316.40
Share Price -30.7% -46.3% -53.1% 121.5%
Key Financial Parameter
Performance Ratio Colour Code Guide
 Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19Mar'20
Return on Equity (%) 1.710.891.455.23-13.74-26.06-37.23-120.4386.6114.12
Operating Profit Margin (%) 14.3322.0620.7232.8412.82-56.76-2.41-141.8-67.25-232.19
Net Profit Margin (%) 3.380.891.135.06-37.69-166.66-102.82-250.39-2414.37-2070.58
Debt to Equity 1.21.552.342.212.854.527.4844.32-1.06-1.02
Working Capital Days 4554143794801,0161,7171,2041,9823,56710,215
Cash Conversion Cycle 4693911412854153496831,0332,103
Entity Percentage Holding
Institutions 8.06%
Non-Institutions 91.94%
Pledged *100.00100.00100.00100.00100.00100.00100.000.000.000.00
* Pledged shares as % of Promoter's holding (%)

MoneyWorks4Me analysed the past 10-year performance of Reliance Naval and Engineering Ltd and arrived at the following conclusion:

Past 10 year's financial track record indicates that Reliance Naval and Engineering Ltd is a below average quality company. However, for specific investment actions please connect with your investment advisor.

The 5-year analysis of Reliance Naval and Engineering Ltd's performance infers:

Reliance Naval and Engineering Ltd earnings have grown by 0%, whereas share price has depreciated -46.3% CAGR over the past five years, indicating the company's share price is likely undervalued. However, for specific investment actions please connect with your investment advisor.

We analysed the performance of Reliance Naval and Engineering Ltd share prices over the last 10 years. Here is what we found out:

Reliance Naval and Engineering Ltd share price has depreciated -28.8% annually over the past ten years.

Pipavav Shipyard, now known as Pipavav Defence and Offshore Engineering company  was originally incorporated as Pipavav Ship Dismantling and Engineering Limited on October 17, 1997 under the Companies Act, 1956, as amended. Pursuant to a special resolution of the shareholders of the Company at an extraordinary general meeting held on April 19, 2005, the name of the Company was changed to Pipavav Shipyard Limited. The fresh certificate of incorporation to reflect the new

Pipavav Shipyard, now known as Pipavav Defence and Offshore Engineering company  was originally incorporated as Pipavav Ship Dismantling and Engineering Limited on October 17, 1997 under the Companies Act, 1956, as amended. Pursuant to a special resolution of the shareholders of the Company at an extraordinary general meeting held on April 19, 2005, the name of the Company was changed to Pipavav Shipyard Limited. The fresh certificate of incorporation to reflect the new name was issued on April 29, 2005 by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli, located at Ahmedabad.

The Pipavav Shipyard was originally promoted by SKIL and Grevek Investments, which hold in the aggregate shareholding interests of approximately 23.09%, these original promoters have been joined by Punj Lloyd through its acquisition of 129,361,538 Equity Shares of the Company, representing an equity interest of approximately 22.29%.

The Pipavav Shipyard enjoys strategic locational advantages and favourable marine conditions and is located adjacent to the Pipavav Port, a modern seaport which was promoted and constructed by GPPL, which originally was a subsidiary of SKIL that was jointly promoted by SKIL and GMB. The Pipavav Port is now owned, operated and managed by the A.P. Moller Group of Denmark following its acquisition of GPPL. The Pipavav Port has connecting rail and road links, including a 273 km railway completed in 2003 (the ‘Pipavav Railway’) and a link road completed in 2001 (the ‘Pipavav Link Road’).

Business area of the company:

The Pipavav Shipyard Company was originally planned and developed as a ship-dismantling facility, in order to meet anticipated demand arising from International Maritime Organization (IMO) regulations that were expected to be implemented in 2002 and which would have resulted in an increased rate of retirement of older tankers by shipowners. When implementation of the IMO regulations was deferred, it decided to convert the ship-dismantling facility then under construction into a shipyard in order to meet expected increase in demand for new vessels. Most of the existing infrastructure from the ship-dismantling facility, including two wet docks of approximately 680 meters in length and 60-65 meters in width, is being incorporated into the construction of the Pipavav Shipyard.

The company is currently completing the construction of the Pipavav Shipyard, located on the west coast of India adjacent to major sea lanes between the Persian Gulf and Asia. Upon completion of construction, the Pipavav Shipyard will be capable of ship construction and repairs for a range of vessels of different sizes and types, including naval vessels and coast guard vessels, as well as the fabrication and construction of products such as offshore platforms, rigs, jackets and vessels (but excluding sub-sea pipelines) for oil and gas companies, which it intend to offer in its Offshore Business (“Offshore Business Products”).

Commercial operations at the Pipavav Shipyard commenced on April 1, 2009. The company is currently constructing vessels while simultaneously completing construction of the offshore yard and installation of two Goliath cranes at the Pipavav Shipyard. The remaining construction of the Pipavav Shipyard (excluding the offshore yard) is expected to be completed in October 2009. The company has also commenced construction of four vessels, the first of which it expect to deliver in April 2010, with subsequent deliveries expected to occur at intervals ranging from one to three months thereafter.

Milestones:

  • October 1998 - The Company acquired the ship dismantling business of GPPL, a company originally promoted by SKIL. In the same month, the Company was granted a sub-lease by GPPL for the establishment and operation of a ship dismantling, repair and building facility in Pipavav Port.
  • October and November 2000 - Subscription by Unit Trust of India to 12.5% optionally convertible cumulative preference shares.
  • April 2005 - The main business of the Company was changed from ship dismantling to shipbuilding and ship repair. The Company also changed its name to reflect the change in its primary business focus.
  • January 2006 - The Company entered into a Technical Assistance Agreement with SembCorp, pursuant to which SembCorp agreed to assist the Company in the planning, designing and construction of the Pipavav Shipyard until the commissioning stage and to provide technical and management assistance in relation to the Company’s business.
  • April 2006 - The Company received approval from the Development Commissioner, Kandla SEZ, for setting up a new undertaking under 100% EOU scheme for manufacture of ships, ship repairs at the site of the Company’s registered office.
  • September 2006-The Company entered into a Basic Agreement for Technical Cooperation with KOMAC, pursuant to which KOMAC agreed to supply designs and provide technical services for the Company’s shipbuilding project.September 2006 - Subscription by 2i Capital PCC, a Mauritius based venture capital investor, to optionally convertible bonds of the Company.
  • September 2006- Subscription by EXIM Bank to Equity Shares of the Company.
  • October 2006 - The Company entered into a share purchase agreement with Metdist Industries Holdings Limited pursuant to which E Complex became a wholly owned subsidiary of the Company.
  • November 2006 - The Company secured its first order for construction of four 74,500 DWT Panamax bulk carriers from Golden Ocean Group Limited, an internationally reputed ship owning company. In addition, the Company also entered into an agreement with Golden Ocean Group Limited for the construction of two optional ships.
  • December 2006 - The Company secured its second order for construction of four 74,500 DWT Panamax bulk carriers from SETAF S.A.S. France, a member of the Bourbon Group in France.
  • December 2006 - The Company secured orders for twelve 74,500 DWT Panamax bulk carriers from the AVGI Maritime Services S.A., a company controlled by the Kyrini Group of Greece. The Company also granted options to the AVGI group to acquire four additional vessels.
  • February 2007 - 2i Capital PCC further subscribed to optionally convertible bonds of the Company.
  • March 2007 - Private equity investment by Trinity Capital (Nine) Limited, a Mauritius based investor.
  • March 2007 - Private equity investment by New York Life Investment Management Fund (FVCI) II, LLC, a Mauritius based venture capital investor.
  • May 2007 - Allotment of Equity Shares on account of conversion of 12.5% optionally convertible cumulative preference shares held by Unit Trust of India.
  • August 2007 - Golden Ocean Group Limited exercised its option and confirmed orders for constructions of two 74,500 DWT Panamax Bulk Carriers.
  • September 2007 -  Punj Lloyd Limited acquired Equity Shares of the Company and became a Promoter of the Company with an understanding that it will carry out its offshore business in India through the Company and thereby expand the Company’s business to include offshore fabrication and construction.
  • September 2007- Private equity investment by Citadel Equity Fund Ltd. CEFL subsequently transferred its shareholding in the Company to ABN AMRO.
  • September 2007 - Allotment of Equity Shares to 2i Capital PCC on account of conversion of the optionally convertible bonds of the Company.
  • November 2007 - Subscription by IDBI, IL&FS Trust Company Limited (as Trustee of SCB Asian Infrastructure Fund), SembCorp and The India Fund Inc. (a Blackstone Group fund) to Equity Shares of the Company.
  • December 2007 - Subscription by The Asia Opportunities Offshore Markets Fund Limited (a Blackstone Group fund) and Merrill Lynch International to Equity Shares of the Company.
  • January 2008 - Subscription by Galleon Special Opportunities Master Fund, SPC Limited - Galleon Asian Crossover Segregated Portfolio, Manz Retail Private Limited (Future Group) and Deutsche Bank AG to Equity Shares of the Company.
  • January 2008 - The Company received approval from the Development Commissioner, Kandla SEZ, for setting up a unit in the SEZ being developed by E Complex in villages Rampara and Lunsapur for undertaking authorized operations of manufacturing ships, vessels, hulls and off-shore activities.
  • February 2008 - The Company commenced steel cutting for the construction of the first four ships with effect from February 11, 2008.
  • April 2009- The Company commenced commercial production with effect from April 1, 2009.
  • June 2009 - The Company received a notification of award of contract of 12 OSVs from ONGC.
  • In 2010 Prime Minister dedicated Pipavav Shipyard to the nation.
  • The Secretariat for Industrial Assistance, Ministry of Industry, Government of India granted Industrial Licence to the Company, allowing it to build inter alia Strategic/Defence Vessels.
  • March 25, 2011 Pipavav gets defence production licenceFriday.
  • From 4th August, 2013 Pipavav Defence commenced production of Offshore Patrol Vessels for the Indian Navy.

Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323

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