ITC 2019-20 Annual Report Analysis

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ITC 2019-20 Annual Report Analysis
Tue, 1 Dec

ITC has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

ITC Income Statement Analysis

  • Operating income during the year rose 2.2% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 3.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 38.7% in FY20 as against 38.1% in FY19.
  • Depreciation charges increased by 17.8% and finance costs increased by 20.4% YoY, respectively.
  • Other income grew by 19.5% YoY.
  • Net profit for the year grew by 21.5% YoY.
  • Net profit margins during the year grew from 25.4% in FY19 to 30.0% in FY20.

ITC Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 483,527 494,041 2.2%
Other income Rs m 21,738 25,979 19.5%
Total Revenues Rs m 505,265 520,019 2.9%
Gross profit Rs m 184,181 191,363 3.9%
Depreciation Rs m 13,966 16,449 17.8%
Interest Rs m 454 547 20.4%
Profit before tax Rs m 191,498 200,346 4.6%
Tax Rs m 63,139 44,418 -29.7%
Profit after tax Rs m 128,359 155,928 21.5%
Gross profit margin % 38.1 38.7
Effective tax rate % 33.0 22.2
Net profit margin % 25.4 30.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Watch: Predict Stock's Next Move Using Volumes

ITC Balance Sheet Analysis

  • The company's current liabilities during FY20 down at Rs 96 billion as compared to Rs 100 billion in FY19, thereby witnessing an decrease of -4.5%.
  • Long-term debt down at Rs 59 million as compared to Rs 82 million during FY19, a fall of 27.6%.
  • Current assets rose 24% and stood at Rs 395 billion, while fixed assets rose 6% and stood at Rs 250 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 774 billion as against Rs 718 billion during FY19, thereby witnessing a growth of 8%.

ITC Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 591,409 652,733 10.4
 
Current Liabilities Rs m 100,120 95,598 -4.5
Long-term Debt Rs m 82 59 -27.6
Total Liabilities Rs m 717,984 773,670 7.8
 
Current assets Rs m 317,473 395,054 24.4
Fixed Assets Rs m 235,106 249,698 6.2
Total Assets Rs m 717,984 773,670 7.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



ITC Cash Flow Statement Analysis

  • ITC's cash flow from operating activities (CFO) during FY20 stood at Rs 147 billion, an improvement of 16.7% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs -62 billion, an improvement of 11.3% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs -82 billion on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs 3 billion from the Rs 2 billion net cash flows seen during FY19.

ITC Cash Flow Statement 2019-20

Particulars No. of months 12 12 % Change
Year Ending Mar-19 Mar-20
Cash Flow from Operating Activities Rs m 125,834 146,897 16.7%
Cash Flow from Investing Activities Rs m -55,457 -61,740 -
Cash Flow from Financing Activities Rs m -68,686 -81,815 -
Net Cash Flow Rs m 1,691 3,342 97.6%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for ITC

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.7, an improvement from the EPS of Rs 10.5 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 194.5, stands at 17.7 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 4.2 times, while the price to sales ratio stands at 5.5 times.
  • The company's price to cash flow (P/CF) ratio stood at 13.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Sales per share (Unadj.) Rs 39.4 40.2
TTM Earnings per share Rs 10.5 12.7
Diluted earnings per share Rs 10.4 12.7
Price to Cash Flow x 16.8 13.9
TTM P/E ratio x 17.6 17.7
Price / Book Value ratio x 6.0 4.2
Market Cap Rs m 2,384,304 2,389,722
Dividends per share (Unadj.) Rs 5.8 10.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for ITC

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 4.1x during FY20, from 3.2x during FY19. 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 367.4x during FY20, from 422.6x during FY19. 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 improved and stood at 23.9% during FY20, from 21.7% during FY20. 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 30.8% during FY20, from 32.5% during FY19. 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 improved and stood at 20.2% during FY20, from 17.9% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Current ratio x 3.2 4.1
Debtors’ Days Days 30 19
Interest coverage x 422.6 367.4
Debt to equity ratio x 0.0 0.0
Return on assets % 17.9 20.2
Return on equity % 21.7 23.9
Return on capital employed % 32.5 30.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

ITC Share Price Performance

Over the last one year, ITC share price has moved down from Rs 246.4 to Rs 194.5, registering a loss of Rs 51.9 or around 21.0%.

Overall, the S&P BSE SENSEX is up 9.3% over the year.

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

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