FIRSTSOURCE SOL. 2017-18 Annual Report Analysis

Mon, 18 Mar

FIRSTSOURCE SOL. 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.

FIRSTSOURCE SOL. Income Statement Analysis

• Operating income during the year fell 0.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 4.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 13.0% in FY18 as against 12.3% in FY17.
• Depreciation charges increased by 11.8% and finance costs decreased by 10.9% YoY, respectively.
• Other income grew by 69.2% YoY.
• Net profit for the year grew by 17.0% YoY.
• Net profit margins during the year grew from 7.8% in FY17 to 9.2% in FY18.

FIRSTSOURCE SOL. Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	35,556	35,353	-0.6%
Other income	Rs m	32	54	69.2%
Total Revenues	Rs m	35,588	35,407	-0.5%
Gross profit	Rs m	4,380	4,589	4.8%
Depreciation	Rs m	590	659	11.8%
Interest	Rs m	453	404	-10.9%
Profit before tax	Rs m	3,369	3,580	6.3%
Tax	Rs m	577	314	-45.5%
Profit after tax	Rs m	2,792	3,266	17.0%
Gross profit margin	%	12.3	13.0
Effective tax rate	%	17.1	8.8
Net profit margin	%	7.8	9.2

FIRSTSOURCE SOL. Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 10 billion as compared to Rs 9 billion in FY17, thereby witnessing an increase of 7.7%.
• Long-term debt down at Rs 142 million as compared to Rs 4 billion during FY17, a fall of 96.0%.
• Current assets rose 1% and stood at Rs 8 billion, while fixed assets rose 1% and stood at Rs 2 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 34 billion as against Rs 34 billion during FY17, thereby witnessing a growth of 1%.

FIRSTSOURCE SOL. Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	20,280	23,518	16.0
Current Liabilities	Rs m	9,121	9,826	7.7
Long-term Debt	Rs m	3,580	142	-96.0
Total Liabilities	Rs m	33,506	33,976	1.4
Current assets	Rs m	7,843	7,891	0.6
Fixed Assets	Rs m	1,497	1,510	0.9
Total Assets	Rs m	33,506	33,976	1.4

FIRSTSOURCE SOL. Cash Flow Statement Analysis

• FIRSTSOURCE SOL.'s cash flow from operating activities (CFO) during FY18 stood at Rs 3 billion, an improvement of 57.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 916 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 843 million from the Rs -299 million net cash flows seen during FY17.

FIRSTSOURCE SOL. 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	1,998	3,151	57.7%
Cash Flow from Investing Activities	Rs m	-2,315	916	-
Cash Flow from Financing Activities	Rs m	35	-3,268	-
Net Cash Flow	Rs m	-299	843	-

Current Valuations for FIRSTSOURCE SOL.

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 4.8, an improvement from the EPS of Rs 4.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 44.9, stands at 8.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 0.8 times.
• The company's price to cash flow (P/CF) ratio stood at 7.6 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	52.2	51.5
TTM Earnings per share	Rs	4.1	4.8
Diluted earnings per share	Rs	4.2	4.9
Price to Cash Flow	x	9.0	7.6
TTM P/E ratio	x	8.2	8.0
Price / Book Value ratio	x	1.4	1.3
Market Cap	Rs m	30,591	29,916
Dividends per share (Unadj.)	Rs	0.0	1.5

Ratio Analysis for FIRSTSOURCE SOL.

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY18, from 0.9x 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 9.9x during FY18, from 8.4x 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 improved and stood at 13.9% during FY18, from 13.8% 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 16.8% during FY18, from 16.0% 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 10.8% during FY18, from 9.7% 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	0.9	0.8
Debtors’ Days	Days	31	39
Interest coverage	x	8.4	9.9
Debt to equity ratio	x	0.2	0.0
Return on assets	%	9.7	10.8
Return on equity	%	13.8	13.9
Return on capital employed	%	16.0	16.8

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

FIRSTSOURCE SOL. Share Price Performance

Over the last one year, FIRSTSOURCE SOL. share price has moved up from Rs 49.7 to Rs 44.9, registering a loss of Rs 4.8 or around 9.6%.

Meanwhile, the S&P BSE IT Index is trading at Rs 15,173.7 (up 0.1%). Over the last one year it has moved up from 12,317.8 to 15,173.7, a gain of 2,856 points (up 23.2%).

Overall, the S&P BSE SENSEX is up 13.4% over the year.

(To know more, check out historical annual results for FIRSTSOURCE SOL. and quarterly results for FIRSTSOURCE SOL.)