KSB 2017-18 Annual Report Analysis

Mon, 31 Dec

KSB has announced its results for the year ended December 2018. Let us have a look at the detailed performance review of the company during FY17-18.

KSB Income Statement Analysis

• Operating income during the year rose 18.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 19.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.7% in CY18 as against 11.7% in CY17.
• Depreciation charges increased by 28.5% and finance costs increased by 5.8% YoY, respectively.
• Other income declined by 32.5% YoY.
• Net profit for the year grew by 2.4% YoY.
• Net profit margins during the year declined from 7.1% in CY17 to 6.2% in CY18.

KSB Income Statement 2017-18

No. of Mths Year Ending		12 Dec-17*	12 Dec-18*	% Change
Net Sales	Rs m	9,194	10,931	18.9%
Other income	Rs m	297	200	-32.5%
Total Revenues	Rs m	9,491	11,131	17.3%
Gross profit	Rs m	1,075	1,283	19.4%
Depreciation	Rs m	309	397	28.5%
Interest	Rs m	35	38	5.8%
Profit before tax	Rs m	1,028	1,049	2.1%
Tax	Rs m	370	377	1.6%
Profit after tax	Rs m	657	673	2.4%
Gross profit margin	%	11.7	11.7
Effective tax rate	%	36.1	35.9
Net profit margin	%	7.1	6.2

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KSB Balance Sheet Analysis

• The company's current liabilities during CY18 stood at Rs 5 billion as compared to Rs 3 billion in CY17, thereby witnessing an increase of 38.3%.
• Current assets rose 27% and stood at Rs 8 billion, while fixed assets rose 1% and stood at Rs 4 billion in CY18.
• Overall, the total assets and liabilities for CY18 stood at Rs 12 billion as against Rs 11 billion during CY17, thereby witnessing a growth of 16%.

KSB Balance Sheet as on December 2018

No. of Mths Year Ending		12 Dec-17*	12 Dec-18*	% Change
Networth	Rs m	7,104	7,578	6.7
Current Liabilities	Rs m	3,294	4,556	38.3
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	10,688	12,434	16.3
Current assets	Rs m	6,356	8,063	26.8
Fixed Assets	Rs m	4,332	4,371	0.9
Total Assets	Rs m	10,688	12,434	16.3

KSB Cash Flow Statement Analysis

• KSB's cash flow from operating activities (CFO) during CY18 stood at Rs 775 million on a YoY basis.
• Cash flow from investing activities (CFI) during CY18 stood at Rs -855 million on a YoY basis.
• Cash flow from financial activities (CFF) during CY18 stood at Rs 17 million, an improvement of 108% on a YoY basis.
• Overall, net cash flows for the company during CY18 stood at Rs -63 million from the Rs -73 million net cash flows seen during CY17.

KSB Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Dec-17	Dec-18
Cash Flow from Operating Activities	Rs m	-254	775	-
Cash Flow from Investing Activities	Rs m	388	-855	-
Cash Flow from Financing Activities	Rs m	-208	17	-
Net Cash Flow	Rs m	-73	-63	-

Current Valuations for KSB

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 19.3, an improvement from the EPS of Rs 18.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 779.3, stands at 36.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.6 times, while the price to sales ratio stands at 2.5 times.
• The company's price to cash flow (P/CF) ratio stood at 25.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Dec-17*	12 Dec-18*
Sales per share (Unadj.)	Rs	264.1	314.0
TTM Earnings per share	Rs	18.9	19.3
Diluted earnings per share	Rs	18.9	19.3
Price to Cash Flow	x	31.9	25.9
TTM P/E ratio	x	45.6	36.7
Price / Book Value ratio	x	3.8	3.7
Market Cap	Rs m	26,645	27,707
Dividends per share (Unadj.)	Rs	6.0	6.0

Ratio Analysis for KSB

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during CY18, from 1.9x during CY17. 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 29.0x during CY18, from 30.0x during CY17. 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 8.9% during CY18, from 9.2% during CY18. 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 14.3% during CY18, from 15.0% during CY17. 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 5.7% during CY18, from 6.5% during CY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Dec-17*	12 Dec-18*
Current ratio	x	1.9	1.8
Debtors’ Days	Days	101	97
Interest coverage	x	30.0	29.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	6.5	5.7
Return on equity	%	9.2	8.9
Return on capital employed	%	15.0	14.3

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

KSB Share Price Performance

Over the last one year, KSB share price has moved up from Rs 723.9 to Rs 790.5, registering a gain of Rs 66.6 or around 9.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,476.7 (down 0.1%). Over the last one year it has moved up from 16,446.0 to 18,476.7, a gain of 2,031 points (up 12.3%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of KSB