KEC INTERNATIONAL 2019-20 Annual Report Analysis

Tue, 31 Mar

KEC INTERNATIONAL 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.

KEC INTERNATIONAL Income Statement Analysis

• Operating income during the year rose 8.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 16.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 10.1% in FY20 as against 9.5% in FY19.
• Depreciation charges increased by 25.7% and finance costs increased by 1.2% YoY, respectively.
• Other income declined by 42.1% YoY.
• Net profit for the year grew by 14.1% YoY.
• Net profit margins during the year grew from 4.5% in FY19 to 4.7% in FY20.

KEC INTERNATIONAL Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	110,220	119,654	8.6%
Other income	Rs m	2,278	1,320	-42.1%
Total Revenues	Rs m	112,498	120,973	7.5%
Gross profit	Rs m	10,420	12,086	16.0%
Depreciation	Rs m	1,171	1,472	25.7%
Interest	Rs m	3,981	4,031	1.2%
Profit before tax	Rs m	7,546	7,903	4.7%
Tax	Rs m	2,588	2,248	-13.2%
Profit after tax	Rs m	4,958	5,655	14.1%
Gross profit margin	%	9.5	10.1
Effective tax rate	%	34.3	28.4
Net profit margin	%	4.5	4.7

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KEC INTERNATIONAL Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 97 billion as compared to Rs 86 billion in FY19, thereby witnessing an increase of 13.7%.
• Long-term debt down at Rs 2 billion as compared to Rs 5 billion during FY19, a fall of 71.8%.
• Current assets rose 9% and stood at Rs 110 billion, while fixed assets rose 21% and stood at Rs 18 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 129 billion as against Rs 117 billion during FY19, thereby witnessing a growth of 10%.

KEC INTERNATIONAL Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	24,351	27,976	14.9
Current Liabilities	Rs m	85,547	97,237	13.7
Long-term Debt	Rs m	5,411	1,527	-71.8
Total Liabilities	Rs m	116,631	128,546	10.2
Current assets	Rs m	101,511	110,211	8.6
Fixed Assets	Rs m	15,121	18,334	21.3
Total Assets	Rs m	116,631	128,546	10.2

KEC INTERNATIONAL Cash Flow Statement Analysis

• KEC INTERNATIONAL's cash flow from operating activities (CFO) during FY20 stood at Rs 875 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -1 billion, an improvement of 69.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs 25 million, an improvement of 102% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -226 million from the Rs -178 million net cash flows seen during FY19.

KEC INTERNATIONAL 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	1,987	875	-56.0%
Cash Flow from Investing Activities	Rs m	-695	-1,179	-
Cash Flow from Financing Activities	Rs m	-1,499	25	-
Net Cash Flow	Rs m	-178	-226	-

Current Valuations for KEC INTERNATIONAL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 22.0, an improvement from the EPS of Rs 19.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 185.5, stands at 8.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.7 times, while the price to sales ratio stands at 0.4 times.
• The company's price to cash flow (P/CF) ratio stood at 9.4 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	428.7	465.4
TTM Earnings per share	Rs	19.3	22.0
Diluted earnings per share	Rs	19.3	22.0
Price to Cash Flow	x	12.6	9.4
TTM P/E ratio	x	15.8	8.4
Price / Book Value ratio	x	3.6	2.4
Market Cap	Rs m	86,459	66,946
Dividends per share (Unadj.)	Rs	2.7	3.4

Ratio Analysis for KEC INTERNATIONAL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.1x during FY20, from 1.2x 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 improved and stood at 3.0x during FY20, from 2.9x 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 declined and down at 20.2% during FY20, from 20.4% 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 improved and stood at 40.4% during FY20, from 38.7% 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 declined and down at 7.5% during FY20, from 7.7% 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	1.2	1.1
Debtors’ Days	Days	16	17
Interest coverage	x	2.9	3.0
Debt to equity ratio	x	0.2	0.1
Return on assets	%	7.7	7.5
Return on equity	%	20.4	20.2
Return on capital employed	%	38.7	40.4

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 299.6 to Rs 185.5, registering a loss of Rs 114.1 or around 38.1%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 10,979.5 (up 1.3%). Over the last one year it has moved down from 18,472.0 to 10,979.5, a loss of 7,493 points (down 40.6%).

Overall, the S&P BSE SENSEX is down 24.2% 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