ENGINEERS INDIA 2017-18 Annual Report Analysis

Sat, 31 Mar

ENGINEERS 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.

ENGINEERS INDIA Income Statement Analysis

• Operating income during the year rose 24.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 46.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.3% in FY18 as against 19.7% in FY17.
• Depreciation charges increased by 5.7% and finance costs decreased by 62.3% YoY, respectively.
• Other income declined by 27.6% YoY.
• Net profit for the year grew by 16.1% YoY.
• Net profit margins during the year declined from 22.4% in FY17 to 20.9% in FY18.

ENGINEERS INDIA Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	14,734	18,300	24.2%
Other income	Rs m	2,482	1,796	-27.6%
Total Revenues	Rs m	17,215	20,096	16.7%
Gross profit	Rs m	2,906	4,255	46.4%
Depreciation	Rs m	227	240	5.7%
Interest	Rs m	52	20	-62.3%
Profit before tax	Rs m	5,108	5,791	13.4%
Tax	Rs m	1,806	1,957	8.4%
Profit after tax	Rs m	3,302	3,833	16.1%
Gross profit margin	%	19.7	23.3
Effective tax rate	%	35.4	33.8
Net profit margin	%	22.4	20.9

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ENGINEERS INDIA Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 27 billion as compared to Rs 17 billion in FY17, thereby witnessing an increase of 60.8%.
• Current assets rose 12% and stood at Rs 42 billion, while fixed assets fell 29% and stood at Rs 6 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 48 billion as against Rs 46 billion during FY17, thereby witnessing a growth of 4%.

ENGINEERS INDIA Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	28,449	23,412	-17.7
Current Liabilities	Rs m	16,879	27,134	60.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	45,887	47,882	4.3
Current assets	Rs m	37,635	42,024	11.7
Fixed Assets	Rs m	8,252	5,857	-29.0
Total Assets	Rs m	45,887	47,882	4.3

ENGINEERS INDIA Cash Flow Statement Analysis

• ENGINEERS INDIA's cash flow from operating activities (CFO) during FY18 stood at Rs 6 billion, an improvement of 153.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -9 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -1 billion from the Rs 1 billion net cash flows seen during FY17.

ENGINEERS 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	2,364	5,988	153.3%
Cash Flow from Investing Activities	Rs m	1,971	1,647	-16.4%
Cash Flow from Financing Activities	Rs m	-2,839	-8,920	-
Net Cash Flow	Rs m	1,496	-1,285	-

Current Valuations for ENGINEERS INDIA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 6.1, an improvement from the EPS of Rs 4.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 158.1, stands at 23.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 5.5 times.
• The company's price to cash flow (P/CF) ratio stood at 26.9 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	21.9	29.0
TTM Earnings per share	Rs	4.9	6.1
Diluted earnings per share	Rs	5.9	6.8
Price to Cash Flow	x	23.0	26.9
TTM P/E ratio	x	25.0	23.5
Price / Book Value ratio	x	5.7	4.7
Market Cap	Rs m	162,353	109,684
Dividends per share (Unadj.)	Rs	3.0	4.0

Ratio Analysis for ENGINEERS INDIA

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.5x 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 296.2x during FY18, from 99.2x 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 16.4% during FY18, from 11.6% 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 24.8% during FY18, from 18.1% 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 8.0% during FY18, from 7.3% 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	1.5
Debtors’ Days	Days	987	1,121
Interest coverage	x	99.2	296.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	7.3	8.0
Return on equity	%	11.6	16.4
Return on capital employed	%	18.1	24.8

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

ENGINEERS INDIA Share Price Performance

Over the last one year, ENGINEERS INDIA share price has moved up from Rs 144.4 to Rs 158.1, registering a gain of Rs 13.8 or around 9.5%.

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 ENGINEERS INDIA and quarterly results for ENGINEERS INDIA)

Read: Latest Annual Report Analysis of ENGINEERS INDIA