GHCL 2018-19 Annual Report Analysis

Sun, 31 Mar

GHCL has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

GHCL Income Statement Analysis

• Operating income during the year rose 16.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 25.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 22.7% in FY19 as against 21.1% in FY18.
• Depreciation charges increased by 6.2% and finance costs increased by 0.6% YoY, respectively.
• Other income declined by 59.1% YoY.
• Net profit for the year declined by 1.6% YoY.
• Net profit margins during the year declined from 12.4% in FY18 to 10.5% in FY19.

GHCL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	28,684	33,413	16.5%
Other income	Rs m	379	155	-59.1%
Total Revenues	Rs m	29,063	33,568	15.5%
Gross profit	Rs m	6,061	7,594	25.3%
Depreciation	Rs m	1,101	1,169	6.2%
Interest	Rs m	1,266	1,273	0.6%
Profit before tax	Rs m	4,074	5,306	30.2%
Tax	Rs m	511	1,801	252.7%
Profit after tax	Rs m	3,564	3,506	-1.6%
Gross profit margin	%	21.1	22.7
Effective tax rate	%	12.5	33.9
Net profit margin	%	12.4	10.5

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GHCL Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 11 billion as compared to Rs 12 billion in FY18, thereby witnessing an decrease of -6.0%.
• Long-term debt down at Rs 7 billion as compared to Rs 7 billion during FY18, a fall of 5.7%.
• Current assets rose 12% and stood at Rs 12 billion, while fixed assets rose 5% and stood at Rs 28 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 40 billion as against Rs 37 billion during FY18, thereby witnessing a growth of 7%.

GHCL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	16,108	19,055	18.3
Current Liabilities	Rs m	11,785	11,082	-6.0
Long-term Debt	Rs m	7,443	7,020	-5.7
Total Liabilities	Rs m	37,350	39,949	7.0
Current assets	Rs m	11,071	12,387	11.9
Fixed Assets	Rs m	26,279	27,562	4.9
Total Assets	Rs m	37,350	39,949	7.0

GHCL Cash Flow Statement Analysis

• GHCL's cash flow from operating activities (CFO) during FY19 stood at Rs 5 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -3 billion, an improvement of 16% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 6 million from the Rs 23 million net cash flows seen during FY18.

GHCL Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	5,895	5,302	-10.1%
Cash Flow from Investing Activities	Rs m	-2,794	-2,712	-
Cash Flow from Financing Activities	Rs m	-3,078	-2,584	-
Net Cash Flow	Rs m	23	6	-73.8%

Current Valuations for GHCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 35.8, an decline from the EPS of Rs 36.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 247.1, stands at 6.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 5.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	294.4	340.8
TTM Earnings per share	Rs	36.6	35.8
Diluted earnings per share	Rs	37.4	36.8
Price to Cash Flow	x	5.3	5.1
TTM P/E ratio	x	9.1	6.5
Price / Book Value ratio	x	1.7	1.3
Market Cap	Rs m	27,335	24,041
Dividends per share (Unadj.)	Rs	5.0	5.0

Ratio Analysis for GHCL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.1x during FY19, from 0.9x during FY18. 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 5.2x during FY19, from 4.2x during FY18. 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 18.4% during FY19, from 22.1% during FY19. 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 25.2% during FY19, from 22.7% during FY18. 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 12.0% during FY19, from 12.9% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	0.9	1.1
Debtors’ Days	Days	3	3
Interest coverage	x	4.2	5.2
Debt to equity ratio	x	0.5	0.4
Return on assets	%	12.9	12.0
Return on equity	%	22.1	18.4
Return on capital employed	%	22.7	25.2

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

GHCL Share Price Performance

Over the last one year, GHCL share price has moved down from Rs 259.3 to Rs 247.1, registering a loss of Rs 12.3 or around 4.7%.

Overall, the S&P BSE SENSEX is up 16.3% over the year.

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

Read: Latest Annual Report Analysis of GHCL