KANSAI NEROLAC 2018-19 Annual Report Analysis

Sun, 31 Mar

KANSAI NEROLAC 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.

KANSAI NEROLAC Income Statement Analysis

• Operating income during the year rose 20.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 5.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.9% in FY19 as against 17.6% in FY18.
• Depreciation charges increased by 37.9% and finance costs increased by 1388.1% YoY, respectively.
• Other income declined by 14.7% YoY.
• Net profit for the year declined by 12.9% YoY.
• Net profit margins during the year declined from 11.4% in FY18 to 8.3% in FY19.

KANSAI NEROLAC Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	45,076	54,243	20.3%
Other income	Rs m	709	605	-14.7%
Total Revenues	Rs m	45,786	54,848	19.8%
Gross profit	Rs m	7,938	7,525	-5.2%
Depreciation	Rs m	771	1,063	37.9%
Interest	Rs m	7	100	1,388.1%
Profit before tax	Rs m	7,870	6,968	-11.5%
Tax	Rs m	2,732	2,491	-8.8%
Profit after tax	Rs m	5,138	4,477	-12.9%
Gross profit margin	%	17.6	13.9
Effective tax rate	%	34.7	35.8
Net profit margin	%	11.4	8.3

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KANSAI NEROLAC Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 10 billion as compared to Rs 9 billion in FY18, thereby witnessing an increase of 6.8%.
• Long-term debt down at Rs 44 million as compared to Rs 97 million during FY18, a fall of 55.2%.
• Current assets fell 10% and stood at Rs 23 billion, while fixed assets rose 42% and stood at Rs 22 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 45 billion as against Rs 41 billion during FY18, thereby witnessing a growth of 9%.

KANSAI NEROLAC Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	31,323	34,163	9.1
Current Liabilities	Rs m	8,900	9,504	6.8
Long-term Debt	Rs m	97	44	-55.2
Total Liabilities	Rs m	41,299	45,179	9.4
Current assets	Rs m	25,850	23,204	-10.2
Fixed Assets	Rs m	15,449	21,975	42.2
Total Assets	Rs m	41,299	45,179	9.4

KANSAI NEROLAC Cash Flow Statement Analysis

• KANSAI NEROLAC's cash flow from operating activities (CFO) during FY19 stood at Rs 999 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 885 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -2 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -347 million from the Rs 57 million net cash flows seen during FY18.

KANSAI NEROLAC 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	3,600	999	-72.2%
Cash Flow from Investing Activities	Rs m	-1,627	885	-
Cash Flow from Financing Activities	Rs m	-1,916	-2,229	-
Net Cash Flow	Rs m	57	-347	-

Current Valuations for KANSAI NEROLAC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.3, an decline from the EPS of Rs 9.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 457.3, stands at 52.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.2 times, while the price to sales ratio stands at 4.5 times.
• The company's price to cash flow (P/CF) ratio stood at 43.0 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	83.6	100.7
TTM Earnings per share	Rs	9.5	8.3
Diluted earnings per share	Rs	9.5	8.3
Price to Cash Flow	x	46.0	43.0
TTM P/E ratio	x	52.6	52.7
Price / Book Value ratio	x	8.4	7.0
Market Cap	Rs m	264,030	238,162
Dividends per share (Unadj.)	Rs	2.6	2.6

Ratio Analysis for KANSAI NEROLAC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY19, from 2.9x 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 deteriorated and stood at 70.9x during FY19, from 1,175.6x 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 13.1% during FY19, from 16.4% 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 declined and down at 20.7% during FY19, from 25.1% 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 10.1% during FY19, from 12.5% 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	2.9	2.4
Debtors’ Days	Days	6	5
Interest coverage	x	1,175.6	70.9
Debt to equity ratio	x	0.0	0.0
Return on assets	%	12.5	10.1
Return on equity	%	16.4	13.1
Return on capital employed	%	25.1	20.7

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

KANSAI NEROLAC Share Price Performance

Over the last one year, KANSAI NEROLAC share price has moved down from Rs 504.2 to Rs 457.3, registering a loss of Rs 47.0 or around 9.3%.

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

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

Read: Latest Annual Report Analysis of KANSAI NEROLAC