DEN NETWORKS 2017-18 Annual Report Analysis

Sat, 31 Mar

DEN NETWORKS 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.

DEN NETWORKS Income Statement Analysis

• Operating income during the year rose 11.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 87.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 21.6% in FY18 as against 12.8% in FY17.
• Depreciation charges decreased by 10.0% and finance costs increased by 1.4% YoY, respectively.
• Other income declined by 27.7% YoY.
• Net profit for the year declined by 91.1% YoY.
• Net profit margins during the year grew from 16.0% in FY17 to 1.3% in FY18.

DEN NETWORKS Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	11,573	12,851	11.0%
Other income	Rs m	413	299	-27.7%
Total Revenues	Rs m	11,987	13,150	9.7%
Gross profit	Rs m	1,481	2,782	87.8%
Depreciation	Rs m	2,761	2,486	-10.0%
Interest	Rs m	652	661	1.4%
Profit before tax	Rs m	-1,518	-66	-95.7%
Tax	Rs m	330	100	-69.8%
Profit after tax	Rs m	-1,848	-165	-91.1%
Gross profit margin	%	12.8	21.6
Effective tax rate	%	-21.7	-151.8
Net profit margin	%	-16.0	-1.3

DEN NETWORKS Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 9 billion as compared to Rs 10 billion in FY17, thereby witnessing an decrease of -9.1%.
• Long-term debt stood at Rs 3 billion as compared to Rs 2 billion during FY17, a growth of 67.1%.
• Current assets rose 14% and stood at Rs 9 billion, while fixed assets fell 3% and stood at Rs 16 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 25 billion as against Rs 24 billion during FY17, thereby witnessing a growth of 2%.

DEN NETWORKS Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	7,964	7,770	-2.4
Current Liabilities	Rs m	9,951	9,044	-9.1
Long-term Debt	Rs m	1,880	3,141	67.1
Total Liabilities	Rs m	24,360	24,927	2.3
Current assets	Rs m	8,167	9,277	13.6
Fixed Assets	Rs m	16,192	15,650	-3.3
Total Assets	Rs m	24,360	24,927	2.3

DEN NETWORKS Cash Flow Statement Analysis

• DEN NETWORKS's cash flow from operating activities (CFO) during FY18 stood at Rs 2 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -827 million, an improvement of 2,450.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -410 million, an improvement of 85% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 641 million from the Rs -737 million net cash flows seen during FY17.

DEN NETWORKS 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	2,021	1,846	-8.7%
Cash Flow from Investing Activities	Rs m	-32	-827	-
Cash Flow from Financing Activities	Rs m	-2,774	-410	-
Net Cash Flow	Rs m	-737	641	-

Current Valuations for DEN NETWORKS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -0.8, an improvement from the EPS of Rs -9.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 100.9, stands at -364.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.2 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 9.0 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	59.8	65.8
TTM Earnings per share	Rs	-9.5	-0.8
Diluted earnings per share	Rs	-3.9	-0.3
Price to Cash Flow	x	43.2	9.0
TTM P/E ratio	x	-18.7	-364.3
Price / Book Value ratio	x	2.0	2.7
Market Cap	Rs m	15,955	20,953
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for DEN NETWORKS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x during FY18, from 0.8x 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 0.9x during FY18, from -1.3x 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 -2.1% during FY18, from -23.2% 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 5.5% during FY18, from -8.8% 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 2.0% during FY18, from -4.9% 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	0.8	1.0
Debtors’ Days	Days	74	86
Interest coverage	x	-1.3	0.9
Debt to equity ratio	x	0.2	0.4
Return on assets	%	-4.9	2.0
Return on equity	%	-23.2	-2.1
Return on capital employed	%	-8.8	5.5

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

DEN NETWORKS Share Price Performance

Over the last one year, DEN NETWORKS share price has moved up from Rs 82.8 to Rs 100.9, registering a gain of Rs 18.1 or around 21.9%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 6,513.3 (down 0.7%). Over the last one year it has moved up from 5,771.5 to 6,513.3, a gain of 742 points (up 12.9%).

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

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

Read: Latest Annual Report Analysis of DEN NETWORKS