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L&T 2018-19 Annual Report Analysis

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L&T 2018-19 Annual Report Analysis
Mon, 8 Jul

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 17.8% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 19.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.6% in FY19 as against 11.4% in FY18.
  • Depreciation charges increased by 8.1% and finance costs increased by 17.4% YoY, respectively.
  • Other income grew by 38.0% YoY.
  • Net profit for the year grew by 27.6% YoY.
  • Net profit margins during the year grew from 6.6% 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 1,196,832 1,410,071 17.8%
Other income Rs m 13,419 18,515 38.0%
Total Revenues Rs m 1,210,251 1,428,586 18.0%
Gross profit Rs m 136,415 163,247 19.7%
Depreciation Rs m 19,287 20,840 8.1%
Interest Rs m 15,385 18,060 17.4%
Profit before tax Rs m 115,162 142,862 24.1%
Tax Rs m 31,989 43,433 35.8%
Profit after tax Rs m 80,044 102,166 27.6%
Gross profit margin % 11.4 11.6
Effective tax rate % 27.8 30.4
Net profit margin % 6.6 7.2
* 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 FY19 stood at Rs 992 billion as compared to Rs 774 billion in FY18, thereby witnessing an increase of 28.2%.
  • Long-term debt stood at Rs 741 billion as compared to Rs 729 billion during FY18, a growth of 1.7%.
  • Current assets rose 23% and stood at Rs 1,079 billion, while fixed assets rose 10% and stood at Rs 351 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 2,791 billion as against Rs 2,439 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 556,570 623,748 12.1
 
Current Liabilities Rs m 774,389 992,443 28.2
Long-term Debt Rs m 729,148 741,208 1.7
Total Liabilities Rs m 2,438,775 2,791,341 14.5
 
Current assets Rs m 873,732 1,078,744 23.5
Fixed Assets Rs m 320,236 351,134 9.6
Total Assets Rs m 2,438,775 2,791,341 14.5
* 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 FY19 stood at Rs -47 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 -47,169 -
Cash Flow from Investing Activities Rs m 39,145 -109,994 -
Cash Flow from Financing Activities Rs m 93,705 154,410 64.8%
Net Cash Flow Rs m 32,539 -2,753 -
* 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 72.8, an improvement from the EPS of Rs 57.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,502.0, stands at 20.7 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.0 times, while the price to sales ratio stands at 1.3 times.
  • The company's price to cash flow (P/CF) ratio stood at 17.1 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 854.0 1,005.2
TTM Earnings per share Rs 57.1 72.8
Diluted earnings per share Rs 57.2 73.0
Price to Cash Flow x 20.3 17.1
TTM P/E ratio x 20.8 20.7
Price / Book Value ratio x 3.7 3.0
Market Cap Rs m 2,104,858 2,100,891
Dividends per share (Unadj.) Rs 16.0 18.0
* 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 deteriorated and stood at 1.1x during FY19, from 1.1x 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 8.9x during FY19, from 8.5x 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 16.4% during FY19, from 14.4% 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 12.0% during FY19, from 9.9% 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 4.3% during FY19, from 3.9% 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 1.1 1.1
Debtors’ Days Days 101 96
Interest coverage x 8.5 8.9
Debt to equity ratio x 1.3 1.2
Return on assets % 3.9 4.3
Return on equity % 14.4 16.4
Return on capital employed % 9.9 12.0
* 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 1,266.7 to Rs 1,502.0, registering a gain of Rs 235.4 or around 18.6%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 19,109.6 (down 2.9%). Over the last one year it has moved up from 17,524.6 to 19,109.6, a gain of 1,585 points (up 9.0%).

Overall, the S&P BSE SENSEX is up 9.7% over the year.

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

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