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CUMMINS INDIA 2017-18 Annual Report Analysis

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CUMMINS INDIA 2017-18 Annual Report Analysis
Thu, 18 Jul

CUMMINS INDIA 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.

CUMMINS INDIA Income Statement Analysis

  • Operating income during the year rose 0.1% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 8.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.3% in FY18 as against 15.8% in FY17.
  • Depreciation charges increased by 10.4% and finance costs decreased by 11.0% YoY, respectively.
  • Other income grew by 14.4% YoY.
  • Net profit for the year declined by 3.3% YoY.
  • Net profit margins during the year declined from 14.0% in FY17 to 13.5% in FY18.

CUMMINS INDIA Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 51,064 51,119 0.1%
Other income Rs m 1,410 1,613 14.4%
Total Revenues Rs m 52,473 52,732 0.5%
Gross profit Rs m 8,046 7,329 -8.9%
Depreciation Rs m 855 944 10.4%
Interest Rs m 171 152 -11.0%
Profit before tax Rs m 8,430 7,847 -6.9%
Tax Rs m 1,878 2,147 14.3%
Profit after tax Rs m 7,363 7,118 -3.3%
Gross profit margin % 15.8 14.3
Effective tax rate % 22.3 27.4
Net profit margin % 14.0 13.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



CUMMINS INDIA Balance Sheet Analysis

  • The company's current liabilities during FY18 stood at Rs 15 billion as compared to Rs 12 billion in FY17, thereby witnessing an increase of 19.7%.
  • Current assets rose 20% and stood at Rs 32 billion, while fixed assets rose 15% and stood at Rs 23 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 57 billion as against Rs 52 billion during FY17, thereby witnessing a growth of 10%.

CUMMINS INDIA Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 38,711 41,186 6.4
 
Current Liabilities Rs m 12,159 14,560 19.7
Long-term Debt Rs m 0 0 0.0
Total Liabilities Rs m 52,143 57,148 9.6
 
Current assets Rs m 26,882 32,301 20.2
Fixed Assets Rs m 19,566 22,568 15.3
Total Assets Rs m 52,143 57,148 9.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



CUMMINS INDIA Cash Flow Statement Analysis

  • CUMMINS INDIA's cash flow from operating activities (CFO) during FY18 stood at Rs 6 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY18 stood at Rs -1 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY18 stood at Rs -5 billion on a YoY basis.
  • Overall, net cash flows for the company during FY18 stood at Rs 284 million from the Rs 386 million net cash flows seen during FY17.

CUMMINS INDIA 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 7,482 6,319 -15.5%
Cash Flow from Investing Activities Rs m -4,868 -1,340 -
Cash Flow from Financing Activities Rs m -2,265 -4,696 -
Net Cash Flow Rs m 386 284 -26.5%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for CUMMINS INDIA

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 25.7, an decline from the EPS of Rs 26.6 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 749.3, stands at 28.7 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 5.9 times, while the price to sales ratio stands at 4.8 times.
  • The company's price to cash flow (P/CF) ratio stood at 28.8 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 184.2 184.4
TTM Earnings per share Rs 26.6 25.7
Diluted earnings per share Rs 26.6 25.7
Price to Cash Flow x 28.0 28.8
TTM P/E ratio x 28.7 28.7
Price / Book Value ratio x 6.1 5.9
Market Cap Rs m 207,692 207,692
Dividends per share (Unadj.) Rs 14.0 10.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for CUMMINS INDIA

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 2.2x during FY18, from 2.2x 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 52.7x during FY18, from 50.4x 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 declined and down at 17.3% during FY18, from 19.0% 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 declined and down at 22.9% during FY18, from 24.3% 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 declined and down at 12.7% during FY18, from 14.4% 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 2.2 2.2
Debtors’ Days Days 69 96
Interest coverage x 50.4 52.7
Debt to equity ratio x 0.0 0.0
Return on assets % 14.4 12.7
Return on equity % 19.0 17.3
Return on capital employed % 24.3 22.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

CUMMINS INDIA Share Price Performance

Over the last one year, CUMMINS INDIA share price has moved up from Rs 639.2 to Rs 749.3, registering a gain of Rs 110.1 or around 17.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,502.4 (down 0.2%). Over the last one year it has moved up from 17,649.2 to 18,502.4, a gain of 853 points (up 4.8%).

Overall, the S&P BSE SENSEX is up 7.2% over the year.

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

Equitymaster requests your view! Post a comment on "CUMMINS INDIA 2017-18 Annual Report Analysis". Click here!

1 Responses to "CUMMINS INDIA 2017-18 Annual Report Analysis"

Harit Jatish Shah

Aug 6, 2019

This is more a narration rather than any kind of detailed annual report analysis. In the balance sheet analysis for example, there is no explanation as to the reasons for the rise in current assets and current liabilities, no proper explanation regarding the components of current assets (debtors, inventory, cash etc) or current liabilities (creditors, provisions etc). It is just stating what happened without any kind of reasoning as to why it has happened! There is no segment on corporate governance, any analysis on number of independent directors and analysis of directors fees, changes in directors during the year if any, no reasoning as to why RoE reduced in the year. This really cannot be called analysis aa such - it's more like dumb reporting with minimal analysis.

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