L&T 2018-19 Annual Report Analysis

Sun, 31 Mar

L&T 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.

L&T Income Statement Analysis

• Operating income during the year rose 18.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 32.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 15.7% in FY19 as against 14.0% in FY18.
• Depreciation charges decreased by 0.3% and finance costs increased by 20.6% YoY, respectively.
• Other income declined by 18.3% YoY.
• Net profit for the year grew by 21.3% YoY.
• Net profit margins during the year grew from 7.1% in FY18 to 7.2% in FY19.

L&T Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	1,195,042	1,413,139	18.3%
Other income	Rs m	48,065	39,247	-18.3%
Total Revenues	Rs m	1,243,108	1,452,386	16.8%
Gross profit	Rs m	166,781	221,264	32.7%
Depreciation	Rs m	19,287	19,230	-0.3%
Interest	Rs m	79,168	95,471	20.6%
Profit before tax	Rs m	116,392	145,809	25.3%
Tax	Rs m	31,989	43,433	35.8%
Profit after tax	Rs m	84,403	102,376	21.3%
Gross profit margin	%	14.0	15.7
Effective tax rate	%	27.5	29.8
Net profit margin	%	7.1	7.2

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L&T Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 1,338 billion as compared to Rs 1,093 billion in FY18, thereby witnessing an increase of 22.4%.
• Long-term debt stood at Rs 741 billion as compared to Rs 729 billion during FY18, a growth of 1.7%.
• Current assets rose 18% and stood at Rs 1,668 billion, while fixed assets rose 9% and stood at Rs 1,081 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 2,749 billion as against Rs 2,411 billion during FY18, thereby witnessing a growth of 14%.

L&T Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	545,864	620,378	13.7
Current Liabilities	Rs m	1,092,744	1,338,023	22.4
Long-term Debt	Rs m	729,148	741,208	1.7
Total Liabilities	Rs m	2,411,225	2,749,284	14.0
Current assets	Rs m	1,416,305	1,667,914	17.8
Fixed Assets	Rs m	994,921	1,081,370	8.7
Total Assets	Rs m	2,411,225	2,749,284	14.0

L&T Cash Flow Statement Analysis

• L&T's cash flow from operating activities (CFO) during FY19 stood at Rs -48 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -110 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 154 billion, an improvement of 65% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -3 billion from the Rs 33 billion net cash flows seen during FY18.

L&T 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	-100,310	-47,558	-
Cash Flow from Investing Activities	Rs m	39,145	-110,228	-
Cash Flow from Financing Activities	Rs m	93,705	154,402	64.8%
Net Cash Flow	Rs m	32,539	-3,385	-

Current Valuations for L&T

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 73.0, an improvement from the EPS of Rs 60.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,384.1, stands at 19.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.1 times, while the price to sales ratio stands at 1.4 times.
• The company's price to cash flow (P/CF) ratio stood at 15.2 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	852.8	1,007.4
TTM Earnings per share	Rs	60.2	73.0
Diluted earnings per share	Rs	60.1	72.9
Price to Cash Flow	x	17.8	15.2
TTM P/E ratio	x	22.2	19.2
Price / Book Value ratio	x	3.8	3.0
Market Cap	Rs m	2,066,039	1,853,356
Dividends per share (Unadj.)	Rs	16.0	18.0

Ratio Analysis for L&T

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.2x during FY19, from 1.3x 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 2.5x during FY19, from 2.5x 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 16.5% during FY19, from 15.5% 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 17.7% during FY19, from 15.3% 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 7.2% during FY19, from 6.8% 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	1.3	1.2
Debtors’ Days	Days	10	10
Interest coverage	x	2.5	2.5
Debt to equity ratio	x	1.3	1.2
Return on assets	%	6.8	7.2
Return on equity	%	15.5	16.5
Return on capital employed	%	15.3	17.7

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 1,311.9 to Rs 1,384.1, registering a gain of Rs 72.2 or around 5.5%.

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 L&T and quarterly results for L&T)

Read: Latest Annual Report Analysis of L&T