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KEC INTERNATIONAL 2018-19 Annual Report Analysis

Sun, 31 Mar

KEC INTERNATIONAL 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.

KEC INTERNATIONAL Income Statement Analysis

• Operating income during the year rose 9.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 3.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 9.5% in FY19 as against 10.7% in FY18.
• Depreciation charges increased by 6.7% and finance costs increased by 25.2% YoY, respectively.
• Other income grew by 460.7% YoY.
• Net profit for the year grew by 7.7% YoY.
• Net profit margins during the year declined from 4.6% in FY18 to 4.5% in FY19.

KEC INTERNATIONAL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	100,677	110,220	9.5%
Other income	Rs m	406	2,278	460.7%
Total Revenues	Rs m	101,083	112,498	11.3%
Gross profit	Rs m	10,772	10,420	-3.3%
Depreciation	Rs m	1,097	1,171	6.7%
Interest	Rs m	3,179	3,981	25.2%
Profit before tax	Rs m	6,902	7,546	9.3%
Tax	Rs m	2,298	2,588	12.6%
Profit after tax	Rs m	4,604	4,958	7.7%
Gross profit margin	%	10.7	9.5
Effective tax rate	%	33.3	34.3
Net profit margin	%	4.6	4.5

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KEC INTERNATIONAL Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 86 billion as compared to Rs 77 billion in FY18, thereby witnessing an increase of 11.7%.
• Long-term debt down at Rs 5 billion as compared to Rs 7 billion during FY18, a fall of 26.7%.
• Current assets rose 15% and stood at Rs 102 billion, while fixed assets fell 10% and stood at Rs 15 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 117 billion as against Rs 105 billion during FY18, thereby witnessing a growth of 11%.

KEC INTERNATIONAL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	19,975	24,351	21.9
Current Liabilities	Rs m	76,582	85,547	11.7
Long-term Debt	Rs m	7,384	5,411	-26.7
Total Liabilities	Rs m	105,125	116,631	10.9
Current assets	Rs m	88,388	101,511	14.8
Fixed Assets	Rs m	16,737	15,121	-9.7
Total Assets	Rs m	105,125	116,631	10.9

KEC INTERNATIONAL Cash Flow Statement Analysis

• KEC INTERNATIONAL's cash flow from operating activities (CFO) during FY19 stood at Rs 2 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -695 million, an improvement of 1,457.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -1 billion, an improvement of 77% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -178 million from the Rs 175 million net cash flows seen during FY18.

KEC INTERNATIONAL 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	6,596	1,987	-69.9%
Cash Flow from Investing Activities	Rs m	-45	-695	-
Cash Flow from Financing Activities	Rs m	-6,382	-1,499	-
Net Cash Flow	Rs m	175	-178	-

Current Valuations for KEC INTERNATIONAL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 19.3, an improvement from the EPS of Rs 17.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 299.6, stands at 15.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.2 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 14.1 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	391.6	428.7
TTM Earnings per share	Rs	17.9	19.3
Diluted earnings per share	Rs	17.9	19.3
Price to Cash Flow	x	17.6	14.1
TTM P/E ratio	x	21.8	15.8
Price / Book Value ratio	x	4.1	3.6
Market Cap	Rs m	82,397	86,459
Dividends per share (Unadj.)	Rs	2.4	2.7

Ratio Analysis for KEC INTERNATIONAL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.2x during FY19, from 1.2x 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 2.9x during FY19, from 3.2x 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 20.4% during FY19, from 23.1% 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 improved and stood at 38.7% during FY19, from 36.8% 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 improved and stood at 7.7% during FY19, from 7.4% 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	1.2	1.2
Debtors’ Days	Days	18	16
Interest coverage	x	3.2	2.9
Debt to equity ratio	x	0.4	0.2
Return on assets	%	7.4	7.7
Return on equity	%	23.1	20.4
Return on capital employed	%	36.8	38.7

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

KEC INTERNATIONAL Share Price Performance

Over the last one year, KEC INTERNATIONAL share price has moved down from Rs 390.4 to Rs 299.6, registering a loss of Rs 90.8 or around 23.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,472.0 (up 0.5%). Over the last one year it has moved down from 18,476.7 to 18,472.0, a loss of 5 points (down 0.0%).

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

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

Read: Latest Annual Report Analysis of KEC INTERNATIONAL