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CUMMINS INDIA 2019-20 Annual Report Analysis

Tue, 31 Mar

CUMMINS INDIA has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

CUMMINS INDIA Income Statement Analysis

• Operating income during the year fell 8.9% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 34.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.9% in FY20 as against 15.2% in FY19.
• Depreciation charges increased by 8.5% and finance costs increased by 25.3% YoY, respectively.
• Other income grew by 8.0% YoY.
• Net profit for the year declined by 10.2% YoY.
• Net profit margins during the year declined from 11.4% in FY19 to 11.2% in FY20.

CUMMINS INDIA Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	56,973	51,915	-8.9%
Other income	Rs m	2,395	2,586	8.0%
Total Revenues	Rs m	59,368	54,501	-8.2%
Gross profit	Rs m	8,646	5,682	-34.3%
Depreciation	Rs m	1,111	1,206	8.5%
Interest	Rs m	168	210	25.3%
Profit before tax	Rs m	9,763	6,852	-29.8%
Tax	Rs m	3,263	1,019	-68.8%
Profit after tax	Rs m	6,500	5,834	-10.2%
Gross profit margin	%	15.2	10.9
Effective tax rate	%	33.4	14.9
Net profit margin	%	11.4	11.2

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CUMMINS INDIA Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 16 billion as compared to Rs 15 billion in FY19, thereby witnessing an increase of 2.2%.
• Current assets fell 1% and stood at Rs 34 billion, while fixed assets rose 7% and stood at Rs 28 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 62 billion as against Rs 61 billion during FY19, thereby witnessing a growth of 2%.

CUMMINS INDIA Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	42,830	44,020	2.8
Current Liabilities	Rs m	15,341	15,676	2.2
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	60,603	61,961	2.2
Current assets	Rs m	34,286	33,823	-1.3
Fixed Assets	Rs m	26,317	28,138	6.9
Total Assets	Rs m	60,603	61,961	2.2

CUMMINS INDIA Cash Flow Statement Analysis

• CUMMINS INDIA's cash flow from operating activities (CFO) during FY20 stood at Rs 6 billion, an improvement of 8.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -4 billion, an improvement of 21% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -140 million from the Rs 431 million net cash flows seen during FY19.

CUMMINS INDIA Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	5,532	6,007	8.6%
Cash Flow from Investing Activities	Rs m	162	-2,139	-
Cash Flow from Financing Activities	Rs m	-5,251	-4,123	-
Net Cash Flow	Rs m	431	-140	-

Current Valuations for CUMMINS INDIA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 21.0, an decline from the EPS of Rs 23.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 325.5, stands at 15.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.0 times, while the price to sales ratio stands at 1.7 times.
• The company's price to cash flow (P/CF) ratio stood at 22.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	205.5	187.3
TTM Earnings per share	Rs	23.4	21.0
Diluted earnings per share	Rs	23.4	21.0
Price to Cash Flow	x	27.1	22.1
TTM P/E ratio	x	28.6	15.5
Price / Book Value ratio	x	4.8	3.5
Market Cap	Rs m	207,456	155,579
Dividends per share (Unadj.)	Rs	17.0	14.0

Ratio Analysis for CUMMINS INDIA

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.2x during FY20, from 2.2x during FY19. 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 deteriorated and stood at 33.6x during FY20, from 59.2x during FY19. 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 13.3% during FY20, from 15.2% during FY20. 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 16.0% during FY20, from 23.2% during FY19. 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 9.8% during FY20, from 11.0% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	2.2	2.2
Debtors’ Days	Days	822	806
Interest coverage	x	59.2	33.6
Debt to equity ratio	x	0.0	0.0
Return on assets	%	11.0	9.8
Return on equity	%	15.2	13.3
Return on capital employed	%	23.2	16.0

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 down from Rs 745.1 to Rs 325.5, registering a loss of Rs 419.6 or around 56.3%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 10,979.5 (up 1.3%). Over the last one year it has moved down from 18,472.0 to 10,979.5, a loss of 7,493 points (down 40.6%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Read: Latest Annual Report Analysis of CUMMINS INDIA