GAIL 2017-18 Annual Report Analysis

Sat, 31 Mar

GAIL 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.

GAIL Income Statement Analysis

• Operating income during the year rose 13.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 14.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.3% in FY18 as against 14.2% in FY17.
• Depreciation charges decreased by 0.9% and finance costs decreased by 40.8% YoY, respectively.
• Other income declined by 18.3% YoY.
• Net profit for the year grew by 17.8% YoY.
• Net profit margins during the year grew from 8.3% in FY17 to 8.6% in FY18.

GAIL Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	477,918	542,984	13.6%
Other income	Rs m	10,494	8,569	-18.3%
Total Revenues	Rs m	488,412	551,553	12.9%
Gross profit	Rs m	68,009	77,790	14.4%
Depreciation	Rs m	15,411	15,269	-0.9%
Interest	Rs m	5,520	3,266	-40.8%
Profit before tax	Rs m	57,573	67,825	17.8%
Tax	Rs m	18,094	21,307	17.8%
Profit after tax	Rs m	39,479	46,518	17.8%
Gross profit margin	%	14.2	14.3
Effective tax rate	%	31.4	31.4
Net profit margin	%	8.3	8.6

GAIL Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 112 billion as compared to Rs 93 billion in FY17, thereby witnessing an increase of 20.3%.
• Long-term debt down at Rs 11 billion as compared to Rs 32 billion during FY17, a fall of 64.8%.
• Current assets rose 16% and stood at Rs 109 billion, while fixed assets rose 3% and stood at Rs 520 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 629 billion as against Rs 597 billion during FY17, thereby witnessing a growth of 5%.

GAIL Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	393,049	416,786	6.0
Current Liabilities	Rs m	92,991	111,863	20.3
Long-term Debt	Rs m	31,798	11,186	-64.8
Total Liabilities	Rs m	596,646	628,755	5.4
Current assets	Rs m	93,841	108,884	16.0
Fixed Assets	Rs m	502,805	519,871	3.4
Total Assets	Rs m	596,646	628,755	5.4

GAIL Cash Flow Statement Analysis

• GAIL's cash flow from operating activities (CFO) during FY18 stood at Rs 88 billion, an improvement of 45.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -26 billion, an improvement of 587.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -53 billion, an improvement of 0% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 9 billion from the Rs 4 billion net cash flows seen during FY17.

GAIL 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	60,243	87,687	45.6%
Cash Flow from Investing Activities	Rs m	-3,829	-26,316	-
Cash Flow from Financing Activities	Rs m	-52,754	-52,516	-
Net Cash Flow	Rs m	4,148	8,576	106.7%

Current Valuations for GAIL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 20.6, an decline from the EPS of Rs 23.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 328.6, stands at 31.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.5 times, while the price to sales ratio stands at 1.4 times.
• The company's price to cash flow (P/CF) ratio stood at 15.1 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	282.6	240.8
TTM Earnings per share	Rs	23.3	20.6
Diluted earnings per share	Rs	8.9	10.5
Price to Cash Flow	x	30.5	15.1
TTM P/E ratio	x	39.0	31.6
Price / Book Value ratio	x	1.9	2.2
Market Cap	Rs m	735,463	934,727
Dividends per share (Unadj.)	Rs	11.2	9.1

Ratio Analysis for GAIL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.0x during FY18, from 1.0x 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 21.8x during FY18, from 11.4x 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 11.2% during FY18, from 10.0% 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 improved and stood at 16.6% during FY18, from 14.9% 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 7.9% during FY18, from 7.5% 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	1.0	1.0
Debtors’ Days	Days	2	2
Interest coverage	x	11.4	21.8
Debt to equity ratio	x	0.1	0.0
Return on assets	%	7.5	7.9
Return on equity	%	10.0	11.2
Return on capital employed	%	14.9	16.6

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

GAIL Share Price Performance

Over the last one year, GAIL share price has moved down from Rs 376.5 to Rs 328.6, registering a loss of Rs 47.9 or around 12.7%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 14,614.4 (up 0.1%). Over the last one year it has moved up from 13,563.6 to 14,614.4, a gain of 1,051 points (up 7.7%).

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

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

Read: Latest Annual Report Analysis of GAIL