Q3-FY24 Result Analysis of Reliance Home Finance Ltd

Earning Snapshot

(Methodology: Red=Decreased, Green=Increased, N/A= Inc/Dec over and above 100% or 1000Bps)

Analysis

Revenue from Operation

1. Q3-FY24: ₹16.1 Lakhs, a decrease of 2.3% from Q2-FY24 (₹16.5 Lakhs).
2. Y-o-Y: A massive decrease of 99.9% from Q3-FY23 (₹14,077.3 Lakhs).
3. 9M-FY24: ₹44.25 Lakhs, a Y-o-Y decrease of 99.9% from 9M-FY23 (₹30,667 Lakhs).

The company is facing a severe decline in revenue, raising concerns about its financial health and operational performance.

Operating Profit

1. Q3-FY24: Operating at a loss of -₹256.05 Lakhs, compared to a loss of -₹66.12 Lakhs in Q2-FY24.
2. Y-o-Y: The operating loss increased by 98.4% from Q3-FY23 (-₹16,335.2 Lakhs).
3. 9M-FY24: The operating profit is ₹294.35 Lakhs, compared to a significant loss of -₹61,208.06 Lakhs in 9M-FY23.
 

The company is operating at a substantial loss, and the situation has worsened compared to the previous periods.

Operating Profit Margin

1. Q3-FY24: The operating profit margin is reported as -1592.4%, and the percentage change is labelled as N/A.
2. Y-o-Y: In Q3-FY23, the operating profit margin was -116.0%.
3. 9M-FY24: The operating profit margin is reported as 665.2%, and the percentage change is labeled as N/A.
Negative operating profit margins indicate that the company's operational expenses exceed its revenue, resulting in significant losses.

Net Profit

1. Q3-FY24: The net profit is reported as -₹256.1 Lakhs, compared to a loss of -₹66.11 Lakhs in Q2-FY24.
2. Y-o-Y: The net loss increased significantly from Q3-FY23 (-₹24,924.0 Lakhs).
3. 9M-FY24: The net profit is ₹320.35 Lakhs, compared to a massive loss of -₹55,373.0 Lakhs in 9M-FY23.

The company is experiencing substantial net losses, raising concerns about its overall financial viability.

Net Profit Margin

1. Q3-FY24: The net profit margin is reported as -1592.4%, and the percentage change is labelled as N/A.
2. Y-o-Y: In Q3-FY23, the net profit margin was -177.1%.
3. 9M-FY24: The net profit margin is reported as 724.0%, and the percentage change is labeled as N/A.
4. Negative net profit margins further emphasize the financial challenges faced by the company.

Earnings Per Share (EPS)

1. Both Basic and Diluted EPS are negative, with significant declines compared to the previous periods.
2. Negative EPS implies a loss per share, indicating a challenging financial situation.

Overall Analysis and Suggestions

1. Reliance Home Finance Ltd. is facing severe financial distress, as evident from the substantial decline in revenue and significant losses.
2. The root causes of these issues, considering potential factors such as operational inefficiencies, high debt levels, or adverse market conditions. (Total debts to total assets is 3.30x & Debt - Equity Ratio is (1.40).
3. Recommendations may include a comprehensive financial restructuring, cost-cutting measures, and strategic initiatives to improve the company's financial position. The company may need to engage in discussions with stakeholders to address its financial challenges.

Conclusion

Concern

1. The promoter holding is down -42.9% from the previous quarter.
2. For the last five years, the company's revenue growth has been a dismal -25.3%.
3. Low promoter holding 0.74%
4. The Capital Adequacy ratio are reported -13.9%, -309.6%, -3,992.6% for the year ended FY2021, FY2022, FY202 respectively.

The capital adequacy ratio has deteriorated significantly, indicating a severe shortfall in capital to cover risk-weighted assets, posing a potential threat to the financial stability and solvency of the institution. Immediate corrective measures and a thorough financial assessment are essential to address and rectify this critical issue.