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L&T 2019-20 Annual Report Analysis
Tue, 31 Mar

L&T 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.

L&T Income Statement Analysis

  • Operating income during the year rose 6.9% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 4.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 15.3% in FY20 as against 15.7% in FY19.
  • Depreciation charges increased by 28.0% and finance costs increased by 18.0% YoY, respectively.
  • Other income grew by 26.4% YoY.
  • Net profit for the year grew by 5.7% YoY.
  • Net profit margins during the year declined from 7.2% in FY19 to 7.2% in FY20.

L&T Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 1,413,139 1,510,194 6.9%
Other income Rs m 39,247 49,611 26.4%
Total Revenues Rs m 1,452,386 1,559,805 7.4%
Gross profit Rs m 221,264 230,848 4.3%
Depreciation Rs m 19,230 24,623 28.0%
Interest Rs m 95,471 112,695 18.0%
Profit before tax Rs m 145,809 143,142 -1.8%
Tax Rs m 43,433 34,919 -19.6%
Profit after tax Rs m 102,376 108,223 5.7%
Gross profit margin % 15.7 15.3
Effective tax rate % 29.8 24.4
Net profit margin % 7.2 7.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Read Now: We're Bullish on 2 Non-Nifty Stocks

L&T Balance Sheet Analysis

  • The company's current liabilities during FY20 stood at Rs 1,447 billion as compared to Rs 1,338 billion in FY19, thereby witnessing an increase of 8.2%.
  • Long-term debt stood at Rs 823 billion as compared to Rs 741 billion during FY19, a growth of 11.1%.
  • Current assets rose 10% and stood at Rs 1,827 billion, while fixed assets rose 12% and stood at Rs 1,216 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 3,043 billion as against Rs 2,749 billion during FY19, thereby witnessing a growth of 11%.

L&T Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 620,378 663,217 6.9
 
Current Liabilities Rs m 1,338,023 1,447,292 8.2
Long-term Debt Rs m 741,208 823,313 11.1
Total Liabilities Rs m 2,749,284 3,042,936 10.7
 
Current assets Rs m 1,667,914 1,826,899 9.5
Fixed Assets Rs m 1,081,370 1,216,037 12.5
Total Assets Rs m 2,749,284 3,042,936 10.7
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



L&T Cash Flow Statement Analysis

  • L&T's cash flow from operating activities (CFO) during FY20 stood at Rs 67 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs -83 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs 64 billion on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs 47 billion from the Rs -3 billion net cash flows seen during FY19.

L&T 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 -47,558 66,939 -
Cash Flow from Investing Activities Rs m -110,228 -82,563 -
Cash Flow from Financing Activities Rs m 154,402 63,716 -58.7%
Net Cash Flow Rs m -3,385 46,577 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for L&T

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 77.1, an improvement from the EPS of Rs 73.0 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 806.9, stands at 11.3 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 0.8 times.
  • The company's price to cash flow (P/CF) ratio stood at 12.0 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 1,007.4 1,075.7
TTM Earnings per share Rs 73.0 77.1
Diluted earnings per share Rs 72.9 77.0
Price to Cash Flow x 16.0 12.0
TTM P/E ratio x 19.2 11.3
Price / Book Value ratio x 3.0 2.4
Market Cap Rs m 1,853,356 1,591,873
Dividends per share (Unadj.) Rs 18.0 18.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for L&T

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 1.3x 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 deteriorated and stood at 2.3x during FY20, from 2.5x 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 16.3% during FY20, from 16.5% 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 declined and down at 17.2% during FY20, from 17.7% 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 improved and stood at 7.3% during FY20, from 7.2% 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 1.3
Debtors’ Days Days 10 10
Interest coverage x 2.5 2.3
Debt to equity ratio x 1.2 1.2
Return on assets % 7.2 7.3
Return on equity % 16.5 16.3
Return on capital employed % 17.7 17.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 down from Rs 1,384.1 to Rs 806.9, registering a loss of Rs 577.2 or around 41.7%.

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 L&T and quarterly results for L&T)

Annual Report FAQs

What is the current share price of L&T?

L&T currently trades at Rs 3,774.1 per share. You can check out the latest share price performance of L&T here...

What was the revenue of L&T in FY20? How does it compare to earlier years?

The revenues of L&T stood at Rs 1,559,805 m in FY20, which was up 7.4% compared to Rs 1,452,386 m reported in FY19.

L&T's revenue has grown from Rs 1,011,895 m in FY16 to Rs 1,559,805 m in FY20.

Over the past 5 years, the revenue of L&T has grown at a CAGR of 11.4%.

What was the net profit of L&T in FY20? How does it compare to earlier years?

The net profit of L&T stood at Rs 108,223 m in FY20, which was up 5.7% compared to Rs 102,376 m reported in FY19.

This compares to a net profit of Rs 84,403 m in FY18 and a net profit of Rs 68,808 m in FY17.

Over the past 5 years, L&T net profit has grown at a CAGR of 18.0%.

What does the cash flow statement of L&T reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of L&T reveals:

  • Cash flow from operations increased in FY20 and stood at Rs 66,939 m as compared to Rs -47,558 m in FY19.
  • Cash flow from investments increased in FY20 and stood at Rs -82,563 m as compared to Rs -110,228 m in FY19.
  • Cash flow from financial activity decreased in FY20 and stood at Rs 63,716 m as compared to Rs 154,402 m in FY19.

Here's the cash flow statement of L&T for the past 5 years.

(Rs m)FY16FY17FY18FY19FY20
From Operations-32,39666,553-100,310-47,55866,939
From Investments-46,266-97,95939,145-110,228-82,563
From Financial Activity72,52728,95993,705154,40263,716
Net Cashflow-6,135-2,44832,539-3,38546,577

What does the Key Ratio analysis of L&T reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of L&T reveals:

  • Operating profit margins witnessed a fall and stood at 15.3% in FY20 as against 15.7% in FY19.
  • Net profit margins declined from 7.2% in FY19 to 7.2% in FY20.
  • Debt to Equity ratio for FY20 stood at 1.2 as compared to 1.2 in FY19.

Here's the ratio/financial analysis of L&T for the past 5 years.

 FY16FY17FY18FY19FY20
Operating Profit Margin (%)15.715.514.015.715.3
Net Profit Margin (%)5.66.37.17.27.2
Debt to Equity Ratio (x)1.41.31.31.21.2

Read: Latest Annual Report Analysis of L&T

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