GRASIM 2017-18 Annual Report Analysis

Sat, 31 Mar

GRASIM 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.

GRASIM Income Statement Analysis

• Operating income during the year rose 71.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 61.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 21.7% in FY18 as against 23.2% in FY17.
• Depreciation charges increased by 50.7% and finance costs increased by 421.5% YoY, respectively.
• Other income declined by 9.2% YoY.
• Net profit for the year grew by 7.3% YoY.
• Net profit margins during the year declined from 12.9% in FY17 to 8.1% in FY18.

GRASIM Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	318,896	547,915	71.8%
Other income	Rs m	9,478	8,607	-9.2%
Total Revenues	Rs m	328,374	556,522	69.5%
Gross profit	Rs m	73,851	118,891	61.0%
Depreciation	Rs m	18,076	27,244	50.7%
Interest	Rs m	7,024	36,632	421.5%
Profit before tax	Rs m	58,229	63,622	9.3%
Tax	Rs m	17,067	19,471	14.1%
Profit after tax	Rs m	41,162	44,151	7.3%
Gross profit margin	%	23.2	21.7
Effective tax rate	%	29.3	30.6
Net profit margin	%	12.9	8.1

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GRASIM Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 425 billion as compared to Rs 110 billion in FY17, thereby witnessing an increase of 286.7%.
• Long-term debt stood at Rs 408 billion as compared to Rs 68 billion during FY17, a growth of 502.7%.
• Current assets rose 118% and stood at Rs 403 billion, while fixed assets rose 278% and stood at Rs 1,676 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 2,079 billion as against Rs 627 billion during FY17, thereby witnessing a growth of 231%.

GRASIM Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	313,454	572,373	82.6
Current Liabilities	Rs m	109,951	425,220	286.7
Long-term Debt	Rs m	67,687	407,934	502.7
Total Liabilities	Rs m	627,474	2,078,987	231.3
Current assets	Rs m	184,595	403,092	118.4
Fixed Assets	Rs m	442,879	1,675,895	278.4
Total Assets	Rs m	627,474	2,078,987	231.3

GRASIM Cash Flow Statement Analysis

• GRASIM's cash flow from operating activities (CFO) during FY18 stood at Rs -41 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 5 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 34 billion, an improvement of 191% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 9 billion from the Rs -195 million net cash flows seen during FY17.

GRASIM 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	72,878	-41,399	-
Cash Flow from Investing Activities	Rs m	-34,877	5,098	-
Cash Flow from Financing Activities	Rs m	-37,986	34,491	-
Net Cash Flow	Rs m	-195	8,555	-

Current Valuations for GRASIM

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 67.2, an decline from the EPS of Rs 88.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,054.1, stands at 15.7 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 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at 10.7 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	683.1	833.5
TTM Earnings per share	Rs	88.2	67.2
Diluted earnings per share	Rs	62.5	67.1
Price to Cash Flow	x	11.7	10.7
TTM P/E ratio	x	19.9	15.7
Price / Book Value ratio	x	4.6	1.3
Market Cap	Rs m	1,430,926	766,084
Dividends per share (Unadj.)	Rs	5.5	6.2

Ratio Analysis for GRASIM

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY18, from 1.7x 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 deteriorated and stood at 2.7x during FY18, from 9.3x 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 declined and down at 7.7% during FY18, from 13.1% 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 declined and down at 10.2% during FY18, from 17.1% 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 declined and down at 3.9% during FY18, from 7.7% 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	1.7	0.9
Debtors’ Days	Days	3	3
Interest coverage	x	9.3	2.7
Debt to equity ratio	x	0.2	0.7
Return on assets	%	7.7	3.9
Return on equity	%	13.1	7.7
Return on capital employed	%	17.1	10.2

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 up from Rs 1,049.4 to Rs 1,054.1, registering a gain of Rs 4.7 or around 0.4%.

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