GRASIM 2018-19 Annual Report Analysis

Sun, 31 Mar

GRASIM 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.

GRASIM Income Statement Analysis

• Operating income during the year rose 41.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 17.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 18.1% in FY19 as against 21.7% in FY18.
• Depreciation charges increased by 31.1% and finance costs increased by 65.4% YoY, respectively.
• Other income declined by 4.0% YoY.
• Net profit for the year declined by 38.5% YoY.
• Net profit margins during the year declined from 8.1% in FY18 to 3.5% in FY19.

GRASIM Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	547,915	772,641	41.0%
Other income	Rs m	8,607	8,264	-4.0%
Total Revenues	Rs m	556,522	780,904	40.3%
Gross profit	Rs m	118,891	139,548	17.4%
Depreciation	Rs m	27,244	35,714	31.1%
Interest	Rs m	36,632	60,600	65.4%
Profit before tax	Rs m	63,622	51,497	-19.1%
Tax	Rs m	19,471	24,340	25.0%
Profit after tax	Rs m	44,151	27,157	-38.5%
Gross profit margin	%	21.7	18.1
Effective tax rate	%	30.6	47.3
Net profit margin	%	8.1	3.5

Revealing on April 30: Are You Ready for the Upcoming Election Surprise?

GRASIM Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 488 billion as compared to Rs 425 billion in FY18, thereby witnessing an increase of 14.7%.
• Long-term debt stood at Rs 567 billion as compared to Rs 408 billion during FY18, a growth of 39.0%.
• Current assets rose 24% and stood at Rs 499 billion, while fixed assets rose 14% and stood at Rs 1,912 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 2,411 billion as against Rs 2,079 billion during FY18, thereby witnessing a growth of 16%.

GRASIM Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	572,373	577,915	1.0
Current Liabilities	Rs m	425,220	487,655	14.7
Long-term Debt	Rs m	407,934	566,861	39.0
Total Liabilities	Rs m	2,078,987	2,411,270	16.0
Current assets	Rs m	403,092	498,806	23.7
Fixed Assets	Rs m	1,675,895	1,912,464	14.1
Total Assets	Rs m	2,078,987	2,411,270	16.0

GRASIM Cash Flow Statement Analysis

• GRASIM's cash flow from operating activities (CFO) during FY19 stood at Rs -17 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -23 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 42 billion, an improvement of 21% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 3 billion from the Rs 9 billion net cash flows seen during FY18.

GRASIM 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	-41,399	-16,586	-
Cash Flow from Investing Activities	Rs m	5,098	-22,710	-
Cash Flow from Financing Activities	Rs m	34,491	41,580	20.6%
Net Cash Flow	Rs m	8,555	2,870	-66.4%

Current Valuations for GRASIM

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 41.3, an decline from the EPS of Rs 67.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 858.2, stands at 22.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.0 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 9.4 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	833.5	1,174.9
TTM Earnings per share	Rs	67.2	41.3
Diluted earnings per share	Rs	67.1	41.3
Price to Cash Flow	x	9.7	9.4
TTM P/E ratio	x	15.7	22.7
Price / Book Value ratio	x	1.3	1.0
Market Cap	Rs m	766,084	593,039
Dividends per share (Unadj.)	Rs	6.2	7.0

Ratio Analysis for GRASIM

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x 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 deteriorated and stood at 1.8x during FY19, from 2.7x 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 4.7% during FY19, from 7.7% 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 9.8% during FY19, from 10.2% 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 3.6% during FY19, from 3.9% 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	1.0
Debtors’ Days	Days	3	3
Interest coverage	x	2.7	1.8
Debt to equity ratio	x	0.7	1.0
Return on assets	%	3.9	3.6
Return on equity	%	7.7	4.7
Return on capital employed	%	10.2	9.8

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

GRASIM Share Price Performance

Over the last one year, GRASIM share price has moved down from Rs 1,054.1 to Rs 858.2, registering a loss of Rs 195.9 or around 18.6%.

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

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

Read: Latest Annual Report Analysis of GRASIM