GHCL 2018-19 Annual Report Analysis

Fri, 24 May

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 14.5% 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 20.8% 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 12.1% in FY18 to 10.4% in FY19.

GHCL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	29,192	33,413	14.5%
Other income	Rs m	379	155	-59.1%
Total Revenues	Rs m	29,572	33,568	13.5%
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	%	20.8	22.7
Effective tax rate	%	12.5	33.9
Net profit margin	%	12.1	10.4

GHCL Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 11 billion as compared to Rs 11 billion in FY18, thereby witnessing an increase of 3.4%.
• Long-term debt down at Rs 7 billion as compared to Rs 7 billion during FY18, a fall of 5.7%.
• Current assets rose 20% and stood at Rs 12 billion, while fixed assets rose 5% and stood at Rs 27 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 40 billion as against Rs 36 billion during FY18, thereby witnessing a growth of 10%.

GHCL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	16,108	19,255	19.5
Current Liabilities	Rs m	10,717	11,082	3.4
Long-term Debt	Rs m	7,443	7,020	-5.7
Total Liabilities	Rs m	36,281	39,949	10.1
Current assets	Rs m	10,003	11,995	19.9
Fixed Assets	Rs m	25,752	27,085	5.2
Total Assets	Rs m	36,281	39,949	10.1

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 244.8, stands at 6.8 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 5.2 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	299.7	340.8
TTM Earnings per share	Rs	36.6	35.8
Diluted earnings per share	Rs	35.6	35.1
Price to Cash Flow	x	5.1	5.2
TTM P/E ratio	x	6.6	6.8
Price / Book Value ratio	x	1.7	1.2
Market Cap	Rs m	23,844	24,480
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 18.2% 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 25.0% 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 13.3% 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	29	32
Interest coverage	x	4.2	5.2
Debt to equity ratio	x	0.5	0.4
Return on assets	%	13.3	12.0
Return on equity	%	22.1	18.2
Return on capital employed	%	22.7	25.0

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 up from Rs 275.5 to Rs 244.8, registering a loss of Rs 30.8 or around 11.2%.

Overall, the S&P BSE SENSEX is up 13.6% over the year.

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