IOC 2018-19 Annual Report Analysis

Sun, 31 Mar

IOC 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.

IOC Income Statement Analysis

• Operating income during the year rose 34.9% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 15.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.0% in FY19 as against 12.7% in FY18.
• Depreciation charges increased by 11.0% and finance costs increased by 27.1% YoY, respectively.
• Other income declined by 20.6% YoY.
• Net profit for the year declined by 26.8% YoY.
• Net profit margins during the year declined from 6.6% in FY18 to 3.6% in FY19.

IOC Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	3,274,418	4,415,564	34.9%
Other income	Rs m	34,199	27,143	-20.6%
Total Revenues	Rs m	3,308,616	4,442,707	34.3%
Gross profit	Rs m	416,580	352,601	-15.4%
Depreciation	Rs m	76,635	85,065	11.0%
Interest	Rs m	38,752	49,254	27.1%
Profit before tax	Rs m	335,391	245,425	-26.8%
Tax	Rs m	118,239	86,531	-26.8%
Profit after tax	Rs m	217,152	158,895	-26.8%
Gross profit margin	%	12.7	8.0
Effective tax rate	%	35.3	35.3
Net profit margin	%	6.6	3.6

IOC Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 1,607 billion as compared to Rs 1,399 billion in FY18, thereby witnessing an increase of 14.9%.
• Long-term debt stood at Rs 392 billion as compared to Rs 231 billion during FY18, a growth of 69.8%.
• Current assets rose 23% and stood at Rs 1,296 billion, while fixed assets rose 7% and stood at Rs 2,260 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 3,556 billion as against Rs 3,164 billion during FY18, thereby witnessing a growth of 12%.

IOC Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	1,138,738	1,124,692	-1.2
Current Liabilities	Rs m	1,399,061	1,607,253	14.9
Long-term Debt	Rs m	230,605	391,525	69.8
Total Liabilities	Rs m	3,164,080	3,555,902	12.4
Current assets	Rs m	1,056,790	1,295,693	22.6
Fixed Assets	Rs m	2,107,290	2,260,209	7.3
Total Assets	Rs m	3,164,080	3,555,902	12.4

IOC Cash Flow Statement Analysis

• IOC's cash flow from operating activities (CFO) during FY19 stood at Rs 127 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -226 billion, an improvement of 31.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 104 billion, an improvement of 187% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 6 billion from the Rs -108 million net cash flows seen during FY18.

IOC 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	291,153	127,465	-56.2%
Cash Flow from Investing Activities	Rs m	-171,187	-225,686	-
Cash Flow from Financing Activities	Rs m	-120,074	104,365	-
Net Cash Flow	Rs m	-108	6,144	-

Current Valuations for IOC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 16.9, an decline from the EPS of Rs 22.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 162.7, stands at 9.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.4 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at 5.5 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	337.2	469.0
TTM Earnings per share	Rs	22.4	16.9
Diluted earnings per share	Rs	23.1	16.9
Price to Cash Flow	x	5.6	5.5
TTM P/E ratio	x	7.8	9.7
Price / Book Value ratio	x	2.7	1.2
Market Cap	Rs m	3,045,624	1,350,461
Dividends per share (Unadj.)	Rs	21.0	9.3

Ratio Analysis for IOC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.8x during FY19, from 0.8x 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 6.0x during FY19, from 9.7x 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 14.1% during FY19, from 19.1% 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 declined and down at 19.4% during FY19, from 27.3% 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 5.9% during FY19, from 8.1% 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	0.8	0.8
Debtors’ Days	Days	1	1
Interest coverage	x	9.7	6.0
Debt to equity ratio	x	0.2	0.3
Return on assets	%	8.1	5.9
Return on equity	%	19.1	14.1
Return on capital employed	%	27.3	19.4

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

IOC Share Price Performance

Over the last one year, IOC share price has moved down from Rs 176.3 to Rs 162.7, registering a loss of Rs 13.6 or around 7.7%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 15,269.7 (up 0.9%). Over the last one year it has moved up from 14,614.4 to 15,269.7, a gain of 655 points (up 4.5%).

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

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

Read: Latest Annual Report Analysis of IOC