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BHEL 2017-18 Annual Report Analysis

Sat, 31 Mar

BHEL has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

BHEL Income Statement Analysis

• Operating income during the year fell 8.7% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 72.7% YoY during the fiscal. Operating profit margins witnessed a growth and down at 3.0% in FY18 as against 10.1% in FY17.
• Depreciation charges decreased by 7.4% and finance costs decreased by 20.0% YoY, respectively.
• Other income declined by 24.9% YoY.
• Net profit for the year grew by 73.2% YoY.
• Net profit margins during the year grew from 1.8% in FY17 to 3.3% in FY18.

BHEL Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	272,226	248,638	-8.7%
Other income	Rs m	46,286	34,754	-24.9%
Total Revenues	Rs m	318,511	283,391	-11.0%
Gross profit	Rs m	-27,568	-7,522	-72.7%
Depreciation	Rs m	8,498	7,873	-7.4%
Interest	Rs m	4,128	3,302	-20.0%
Profit before tax	Rs m	6,091	16,056	163.6%
Tax	Rs m	1,304	7,767	495.7%
Profit after tax	Rs m	4,787	8,290	73.2%
Gross profit margin	%	-10.1	-3.0
Effective tax rate	%	21.4	48.4
Net profit margin	%	1.8	3.3

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BHEL Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 242 billion as compared to Rs 236 billion in FY17, thereby witnessing an increase of 2.4%.
• Long-term debt down at Rs 572 million as compared to Rs 896 million during FY17, a fall of 36.1%.
• Current assets fell 4% and stood at Rs 445 billion, while fixed assets rose 21% and stood at Rs 177 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 622 billion as against Rs 610 billion during FY17, thereby witnessing a growth of 2%.

BHEL Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	323,890	323,350	-0.2
Current Liabilities	Rs m	236,347	241,968	2.4
Long-term Debt	Rs m	896	572	-36.1
Total Liabilities	Rs m	609,933	621,702	1.9
Current assets	Rs m	463,960	444,722	-4.1
Fixed Assets	Rs m	145,973	176,980	21.2
Total Assets	Rs m	609,933	621,702	1.9

BHEL Cash Flow Statement Analysis

• BHEL's cash flow from operating activities (CFO) during FY18 stood at Rs 10 billion, an improvement of 76.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 10 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 13 billion from the Rs -5 billion net cash flows seen during FY17.

BHEL Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	5,604	9,891	76.5%
Cash Flow from Investing Activities	Rs m	-5,652	9,612	-
Cash Flow from Financing Activities	Rs m	-4,679	-6,674	-
Net Cash Flow	Rs m	-4,726	12,829	-

Current Valuations for BHEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 2.3, an improvement from the EPS of Rs 2.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 81.4, stands at 35.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 1.2 times.
• The company's price to cash flow (P/CF) ratio stood at 29.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	111.2	67.7
TTM Earnings per share	Rs	2.0	2.3
Diluted earnings per share	Rs	1.4	2.4
Price to Cash Flow	x	42.7	29.8
TTM P/E ratio	x	114.5	35.1
Price / Book Value ratio	x	1.1	1.5
Market Cap	Rs m	347,926	481,321
Dividends per share (Unadj.)	Rs	1.6	1.8

Ratio Analysis for BHEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during FY18, from 2.0x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 5.9x during FY18, from 2.5x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 2.6% during FY18, from 1.5% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 6.0% during FY18, from 3.1% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 1.9% during FY18, from 1.5% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	2.0	1.8
Debtors’ Days	Days	30	21
Interest coverage	x	2.5	5.9
Debt to equity ratio	x	0.0	0.0
Return on assets	%	1.5	1.9
Return on equity	%	1.5	2.6
Return on capital employed	%	3.1	6.0

To see how BHEL has performed over the last 5 years, please visit here.

BHEL Share Price Performance

Over the last one year, BHEL share price has moved down from Rs 163.1 to Rs 81.4, registering a loss of Rs 81.7 or around 50.1%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,476.7 (down 0.1%). Over the last one year it has moved up from 16,446.0 to 18,476.7, a gain of 2,031 points (up 12.3%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for BHEL and quarterly results for BHEL)

Read: Latest Annual Report Analysis of BHEL