JSW STEEL 2018-19 Annual Report Analysis

Sun, 31 Mar

JSW STEEL 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.

JSW STEEL Income Statement Analysis

• Operating income during the year rose 20.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 30.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 22.4% in FY19 as against 20.6% in FY18.
• Depreciation charges increased by 19.3% and finance costs increased by 5.8% YoY, respectively.
• Other income grew by 22.2% YoY.
• Net profit for the year grew by 24.4% YoY.
• Net profit margins during the year grew from 8.6% in FY18 to 8.9% in FY19.

JSW STEEL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	706,550	847,570	20.0%
Other income	Rs m	1,670	2,040	22.2%
Total Revenues	Rs m	708,220	849,610	20.0%
Gross profit	Rs m	145,300	189,520	30.4%
Depreciation	Rs m	33,870	40,410	19.3%
Interest	Rs m	37,010	39,170	5.8%
Profit before tax	Rs m	76,090	111,980	47.2%
Tax	Rs m	15,380	36,440	136.9%
Profit after tax	Rs m	60,710	75,540	24.4%
Gross profit margin	%	20.6	22.4
Effective tax rate	%	20.2	32.5
Net profit margin	%	8.6	8.9

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JSW STEEL Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 420 billion as compared to Rs 290 billion in FY18, thereby witnessing an increase of 45.0%.
• Long-term debt down at Rs 297 billion as compared to Rs 317 billion during FY18, a fall of 6.5%.
• Current assets rose 45% and stood at Rs 336 billion, while fixed assets rose 18% and stood at Rs 812 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 1,148 billion as against Rs 920 billion during FY18, thereby witnessing a growth of 25%.

JSW STEEL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	279,570	347,040	24.1
Current Liabilities	Rs m	289,640	420,080	45.0
Long-term Debt	Rs m	317,230	296,560	-6.5
Total Liabilities	Rs m	919,700	1,147,970	24.8
Current assets	Rs m	231,920	335,550	44.7
Fixed Assets	Rs m	687,780	812,420	18.1
Total Assets	Rs m	919,700	1,147,970	24.8

JSW STEEL Cash Flow Statement Analysis

• JSW STEEL's cash flow from operating activities (CFO) during FY19 stood at Rs 146 billion, an improvement of 18.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -114 billion, an improvement of 152.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 18 billion, an improvement of 121% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 50 billion from the Rs -3 billion net cash flows seen during FY18.

JSW STEEL 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	123,790	146,330	18.2%
Cash Flow from Investing Activities	Rs m	-45,290	-114,480	-
Cash Flow from Financing Activities	Rs m	-81,850	17,530	-
Net Cash Flow	Rs m	-3,350	49,990	-

Current Valuations for JSW STEEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 31.5, an improvement from the EPS of Rs 25.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 292.9, stands at 9.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.0 times, while the price to sales ratio stands at 0.8 times.
• The company's price to cash flow (P/CF) ratio stood at 7.1 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	293.6	352.9
TTM Earnings per share	Rs	25.2	31.5
Diluted earnings per share	Rs	25.1	31.3
Price to Cash Flow	x	7.4	7.1
TTM P/E ratio	x	11.5	9.3
Price / Book Value ratio	x	2.2	2.4
Market Cap	Rs m	607,333	821,505
Dividends per share (Unadj.)	Rs	3.2	4.1

Ratio Analysis for JSW STEEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated 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 improved and stood at 3.9x during FY19, from 3.1x 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 improved and stood at 21.8% during FY19, from 21.7% 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 improved and stood at 23.5% during FY19, from 19.0% 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 10.0% during FY19, from 10.6% 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	2	3
Interest coverage	x	3.1	3.9
Debt to equity ratio	x	1.1	0.9
Return on assets	%	10.6	10.0
Return on equity	%	21.7	21.8
Return on capital employed	%	19.0	23.5

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

JSW STEEL Share Price Performance

Over the last one year, JSW STEEL share price has moved up from Rs 288.1 to Rs 292.9, registering a gain of Rs 4.8 or around 1.7%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 11,355.1 (up 2.3%). Over the last one year it has moved down from 13,322.0 to 11,355.1, a loss of 1,967 points (down 14.8%).

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

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

Read: Latest Annual Report Analysis of JSW STEEL