RIL To Turn Cash Flow Positive This Year, Says CLSA
Reliance Industries Ltd. is likely to turn cash flow positive this financial year, according to international brokerage house CLSA.
India’s biggest company by market capitalisation is expected to report consolidated free cash flow of nearly $1 billion in the financial year 2017-18, ending a four-year stretch of negative cash flows, said CLSA.
RIL, which completed its capital expenditure cycle, has commissioned the world's largest refinery off-gas cracker complex at Jamnagar in Gujarat. Monetisation of this complex, coupled with petcoke gasification plant, which is in an advanced stage of commissioning, will boost the operating income of the company, the brokerage added. However, the full benefits will come only in the next financial year.
Morgan Stanley expects the cracker to add nearly 10 percent to the earnings before interest, tax, and depreciation and amortisation in the financial year 2018-19. Another global brokerage firm Goldman Sachs, expects RIL’s operating income to double over the next three years.
How Can RIL Monetise Jio?
RIL, which focused on its telecom venture in 2017, managed to gather nearly 15 crore subscribers on the back of cheap plans and high capacity data network. CLSA now expects the Mukesh Ambani-led firm to monetise not only Reliance Jio Infocomm Ltd.’s customers but also its industry-leading capacities.
Possible Monetisation Strategy
- Gradually increase average revenue per user
- Ramp-up 4G feature phones
- Launch home-broadband
- Start enterprise solutions to monetise its optic fibre network
RIL can also gain by selling differentiated product or services to its existing Jio customers. The telecom venture, which has the fourth largest customer base in India can monetise its customer base by cross-selling retail products, added CLSA.
Jio’s had offered discounts on online and offline retail channels as part of its recent cash-back recharge offers.