Reliance Communication: Invest Now?

Reliance Communications Limited is an India-based communications service provider, with a range of businesses including India Data Center Business, National Long Distance Business, and International Long Distance Business. As of June 2024, the company's share price was ₹1.59, with a market cap of ₹445.2. In the past, Reliance Communication has shed weight, resulting in a higher stock price. However, one source from 2013 suggests that the company's decision to spin off its real estate assets into a separate company may not add much value for shareholders in the long run.

Reliance Communication's stock performance

Reliance Communications Stock Performance

Reliance Communications Limited is an India-based communications service provider. The company offers wireline and wireless services to businesses and government segments, including multinational conglomerates and small and mid-size enterprises.

In 2013, the stock price of Reliance Communications moved higher, delivering one of the biggest returns at the time. From a low of Rs 50.20 on March 26, 2013, the stock price touched a high of Rs 148.35 on July 8, 2013. This surge in stock price occurred during a volatile period for broad indices, and while its peer group stocks delivered comparatively flattish returns.

A series of measures announced by the company, including a long-term lease arrangement with Reliance Industries for its 4G network rollout, contributed to the positive performance. Additionally, the company's decision to sell a stake in its Flag undersea cable asset and its Direct-to-Home venture positively impacted its stock price.

However, a subsequent decision to spin off its real estate assets into a separate company, Reliance Properties, was met with skepticism. This move was seen as potentially detrimental to RCom shareholders in the long run, as it would result in additional rental expenses, and there was no clarity on how much debt would be transferred to the new company.

Fast forward to 2024, and the share price of Reliance Communications as of July 8, 2024, was 24,320.55, with a market capitalization of 446.30 Lac Crs or $5.35 Tn.

Looking at the company's more recent financial performance, Reliance Communications' consolidated net sales for the quarter ending March 2024 were Rs 92.00 crore, a decrease of 17.12% year-over-year. Similarly, the company's standalone net sales for the same period were Rs 70.00 crore, down 17.65% year-over-year.

In summary, while Reliance Communications has had a notable surge in stock price in the past, its more recent performance, as indicated by its financial reports, suggests a downward trend in sales.

Reliance Communication's valuation

Reliance Communications Valuation

Reliance Communications (RCom) has seen its stock price fluctuate over the years, with periods of strong returns followed by declines. In 2013, the stock price surged by almost 200% in a single quarter, but it has also faced significant debt issues and regulatory investigations.

In terms of valuation, RCom's market capitalisation as of July 2024 was 446.30 Lac Crs, or $5.35 trillion. The company's share price has shown strong momentum, with technical indicators tempting investors to buy. However, it's important to note that RCom has faced challenges, including regulatory investigations and a high debt burden.

RCom's valuation has been impacted by its efforts to reduce debt. In 2013, the company entered into a long-term lease arrangement with Reliance Industries, which helped reduce its external commercial borrowings by nearly $1 billion. Additionally, RCom announced plans to sell stakes in its undersea cable asset and Direct-to-Home venture.

However, one of RCom's strategies to reduce debt, the demerger of its real estate business, may not have added much value to shareholders in the long run. The creation of a separate company, Reliance Properties, meant that RCom would have to pay rent for the properties it operated from, resulting in additional expenses for investors.

RCom's valuation has also been influenced by its association with Jio. In 2017, RIL (Reliance Industries Limited) announced it would acquire the wireless assets of Anil Ambani-led RCom for about ₹23,000 crores. This acquisition strengthened Jio's position in the market and may have impacted RCom's valuation.

In terms of financial performance, RCom's consolidated net sales for the quarter ending March 2024 were Rs 92.00 crore, down 17.12% year-over-year. The company's share price has shown bullish trends, and it has a history of providing positive returns in July, with 12 out of 19 years of positive returns in this month.

Overall, while RCom's valuation has had its ups and downs, the company has taken steps to improve its financial position and reduce debt. However, investors should carefully consider the company's historical performance, regulatory issues, and future prospects before making any investment decisions.

Reliance Communication's business areas

Reliance Communications Business Areas

Reliance Communications Limited (RCOM) is a provider of fixed-line communications, data centre services, enterprise solutions, and subsea cable networks. The company offers a wide range of services, including fixed-line telephony, internet, national and global network services, cloud networking, cloud telephony, collaboration, and wholesale voice and VAS services.

RCOM is one of the leading wireless communication products distributors in the US, and one of only three authorized Verizon Wireless distributors in the country. The company has been a market leader for more than two decades, providing a one-stop service solution for the world's leading wireless carriers, device manufacturers, and retailers.

RCOM's services include engineering support, marketing support, product training, fulfilment, inventory management, repair, refurbishment, and reclamation.

The company has a significant corporate customer base, including 40,000 Indian and multinational corporations, as well as small and medium enterprises. RCOM's network touches 90% of the country's population and is supported by an extensive OFC network.

RCOM owns the world's largest private under-sea cable system under its subsidiary Global Cloud Xchange (GCX). GCX offers a comprehensive portfolio of solutions for carriers, enterprises, and new media companies globally. GCX's under-sea cable system spans more than 67,000 route kilometres, seamlessly integrated with RCOM's 200,000 route kilometres of domestic optic fibre backbone.

RCOM operates data centres in several cities across India, including Mumbai, Bengaluru, Chennai, and Hyderabad. The company also operates subsea cables in India, Australia, New Zealand, Europe, the US, Asia, and the Middle East.

In addition to its core business areas, RCOM has expanded through acquisitions and mergers. In 2010, the company acquired Digicable India's largest cable network, and Sistema Shyam TeleServices Limited (SSTL), operating as MTS India. RCOM also attempted a merger with Aircel, which did not come to fruition.

In 2022, RCOM's assets were acquired by Reliance Jio, a subsidiary of Reliance Industries Limited, an Indian multinational conglomerate with business areas including telecommunications, retail, entertainment, and textiles.

Reliance Communication's recent performance summary

Recent Performance Summary

Reliance Communications Limited is an India-based communications service provider. The company provides wireline and wireless telecom services to businesses and government segments, serving approximately 10,000 businesses of all sizes.

Reliance Communications' recent performance summary indicates a mixed bag of results. The company's Return on Equity (ROE) has increased to 2.10%, an improvement over the last 3 years. However, sales growth has been subdued in the last 3 years at -25.96%, and in the last 4 quarters, it stands at -12.55%.

The company's financial track record over the past ten years has been below average, according to Moneyworks4me. The stock price of Reliance Communications has been volatile, with a 52-week high of ₹2.49 and a 52-week low of ₹1.01 as of June 5, 2024.

In terms of valuation, the key valuation ratios suggest that the company is somewhat overvalued at present. The Price Trend analysis indicates a 'Semi Strong' rating, suggesting that the stock price is likely to rise somewhat in the short term.

Reliance Communications has a broad range of businesses, including India Data Center Business (IDC), National Long Distance Business (NLD), and International Long Distance Business (ILD). The company offers a comprehensive portfolio of services such as network connectivity, cloud networking, data centre services, enterprise voice, and collaboration tools.

Overall, while there have been some positive signs in the company's recent performance, the long-term financial track record and subdued sales growth may give potential investors pause for thought.

Reliance Communication's financial track record

Reliance Communications Financial Track Record

Reliance Communications Ltd (RCOM) is a telecommunications company listed on the National Stock Exchange and the Bombay Stock Exchange. The company is part of the Anil Dhirubhai Ambani Group and is India's leading integrated telecommunications company with over 85 million customers.

RCOM's financial track record has been mixed over the years, with some highs and lows. Here is an overview of the company's financial performance and some key highlights:

Recent Financial Performance:

As of June 2024, the share price of RCOM is ₹1.59, with a market cap of ₹445.2 crore. The P/E ratio is 0.00, and the P/B ratio is -0.01. The 52-week high and low are ₹2.49 and ₹1.01, respectively.

Historical Performance:

• RCOM has had a substantial customer base and growth over the years. In March 2009, the company added a record of 3.3 million wireless customers, and in January 2009, they added 5 million new subscribers.
• In 2010, RCOM achieved a landmark of 100 million customers and expanded its services with various partnerships and acquisitions.
• In 2008, RCOM's net profit increased by 23.9% to ₹1,512 crore, and the company continued to expand its global presence.
• In 2007, RCOM introduced various new services, including international roaming and money transfer services.
• In 2006, the company changed its name from Reliance Communication Ventures Limited to Reliance Communications Limited and continued to expand its offerings.
• In the early 2000s, RCOM launched its mobile services, with the initial launch in 2002, and quickly gained a large customer base.

Analysis of Financial Track Record:

According to Moneyworks4me, RCOM's 10-year financial track record indicates that the company is a below-average quality company. The price trend analysis suggests that RCOM is Semi-Strong, indicating that the price is likely to rise somewhat in the short term. However, it is recommended to check the ratings on Quality and Valuation before investing.

Key Financial Parameters:

• Return on Equity has increased to 2.10% compared to the last 3 years' average.
• Sales growth has been subdued in the last 3 years at -25.96% and in the last 4 quarters at -12.55%.
• RCOM's total current assets, total current liabilities, and total shareholders' funds can be found in their balance sheets.

In summary, while RCOM has had some notable achievements and milestones over the years, its financial track record has been somewhat inconsistent. It is essential to carefully consider the company's current financial position, growth prospects, and potential risks before making any investment decisions.

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