L&T 2017-18 Annual Report Analysis

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L&T 2017-18 Annual Report Analysis
Mon, 13 Aug

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

L&T Income Statement Analysis

  • Operating income during the year rose 9.5% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 21.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.3% in FY18 as against 10.2% in FY17.
  • Depreciation charges and finance costs decreased by 18.6% YoY and 14.8% YoY, respectively.
  • Other income grew by 5.1% YoY.
  • Net profit for the year grew by 23.4% YoY.
  • Net profit margins during the year grew from 5.9% in FY17 to 6.6% in FY18.

L&T Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 1,093,118 1,196,832 9.5%
Other income Rs m 13,441 14,120 5.1%
Total Revenues Rs m 1,106,559 1,210,952 9.4%
Gross profit Rs m 111,316 135,714 21.9%
Depreciation Rs m 23,699 19,287 -18.6%
Interest Rs m 13,398 15,385 14.8%
Profit before tax Rs m 87,659 115,162 31.4%
Tax Rs m 20,066 31,989 59.4%
Profit after tax Rs m 64,855 80,044 23.4%
Gross profit margin % 10.2 11.3
Effective tax rate % 22.9 27.8
Net profit margin % 5.9 6.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



L&T Balance Sheet Analysis

  • The company's current liabilities during FY18 stood at Rs 773 billion as compared to Rs 617 billion in FY17, thereby witnessing an increase of 25.1%.
  • Long-term debt stood at Rs 729 billion as compared to Rs 673 billion during FY17, a growth of 8.3%.
  • Current assets rose 8% and stood at Rs 834 billion, while fixed assets rose 7% and stood at Rs 320 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 2,451 billion as against Rs 2,122 billion during FY17, thereby witnessing a growth of 15%.

L&T Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 502,165 556,570 10.8
 
Current Liabilities Rs m 617,369 772,533 25.1
Long-term Debt Rs m 673,406 729,148 8.3
Total Liabilities Rs m 2,121,816 2,450,534 15.5
 
Current assets Rs m 769,953 833,532 8.3
Fixed Assets Rs m 299,751 320,236 6.8
Total Assets Rs m 2,121,816 2,450,534 15.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



L&T Cash Flow Statement Analysis

  • L&T's cash flow from operating activities (CFO) during FY18 stood at Rs -100 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY18 stood at Rs 39 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY18 stood at Rs 94 billion, an improvement of 224% on a YoY basis.
  • Overall, net cash flows for the company during FY18 stood at Rs 33 billion from the Rs -2 billion net cash flows seen during FY17.

L&T Cash Flow Statement 2017-18

Particulars No. of months 12 12 % Change
Year Ending Mar-17 Mar-18
Cash Flow from Operating Activities Rs m 66,553 -100,310 -
Cash Flow from Investing Activities Rs m -97,959 39,145 -
Cash Flow from Financing Activities Rs m 28,959 93,705 223.6%
Net Cash Flow Rs m -2,448 32,539 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for L&T

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 57.1, an decline from the EPS of Rs 69.5 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,276.5, stands at 21.1 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.7 times, while the price to sales ratio stands at 1.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 17.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Sales per share (Unadj.) Rs 1,171.7 854.0
TTM Earnings per share Rs 69.5 57.1
Diluted earnings per share Rs 46.4 57.2
Price to Cash Flow x 12.9 17.2
TTM P/E ratio x 14.1 21.1
Price / Book Value ratio x 2.6 3.7
Market Cap Rs m 1,190,936 1,785,478
Dividends per share (Unadj.) Rs 21.0 16.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for L&T

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 1.1x during FY18, from 1.2x during FY17. 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 8.5x during FY18, from 7.5x during FY17. 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 14.4% during FY18, from 12.9% during FY18. 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 9.9% during FY18, from 8.4% during FY17. 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 3.9% during FY18, from 3.7% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Current ratio x 1.2 1.1
Debtors’ Days Days 96 106
Interest coverage x 7.5 8.5
Debt to equity ratio x 1.3 1.3
Return on assets % 3.7 3.9
Return on equity % 12.9 14.4
Return on capital employed % 8.4 9.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



To see how L&T has performed over the last 5 years, please visit here.

L&T Share Price Performance

Over the last one year, L&T share price has moved up from Rs 1,132.8 to Rs 1,276.5, registering a gain of Rs 143.7 or around 12.7%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,112.7 (up 0.1%). Over the last one year it has moved up from 16,927.4 to 18,112.7, a gain of 1,185 points (up 7.0%).

Overall, the S&P BSE SENSEX is up 19.6% over the year.

(To know more, check out historical annual results for L&T and quarterly results for L&T)

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