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

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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

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

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

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

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)