L&T 2019-20 Annual Report Analysis

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L&T 2019-20 Annual Report Analysis
Thu, 6 Aug

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 7.6% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 2.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 11.2% in FY20 as against 11.8% in FY19.
  • Depreciation charges increased by 28.0% and finance costs increased by 55.2% YoY, respectively.
  • Other income grew by 28.6% YoY.
  • Net profit for the year grew by 0.2% YoY.
  • Net profit margins during the year declined from 7.5% in FY19 to 6.9% in FY20.

L&T Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 1,352,203 1,454,524 7.6%
Other income Rs m 18,365 23,609 28.6%
Total Revenues Rs m 1,370,568 1,478,133 7.8%
Gross profit Rs m 158,990 163,290 2.7%
Depreciation Rs m 19,230 24,623 28.0%
Interest Rs m 18,026 27,967 55.2%
Profit before tax Rs m 140,099 134,310 -4.1%
Tax Rs m 40,671 32,632 -19.8%
Profit after tax Rs m 102,166 102,397 0.2%
Gross profit margin % 11.8 11.2
Effective tax rate % 29.0 24.3
Net profit margin % 7.5 6.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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L&T Balance Sheet Analysis

  • The company's current liabilities during FY20 stood at Rs 1,077 billion as compared to Rs 991 billion in FY19, thereby witnessing an increase of 8.7%.
  • Long-term debt stood at Rs 823 billion as compared to Rs 741 billion during FY19, a growth of 11.1%.
  • Current assets rose 5% and stood at Rs 1,139 billion, while fixed assets rose 34% and stood at Rs 470 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 3,081 billion as against Rs 2,783 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 623,748 667,232 7.0
 
Current Liabilities Rs m 990,519 1,076,679 8.7
Long-term Debt Rs m 741,208 823,313 11.1
Total Liabilities Rs m 2,783,474 3,081,401 10.7
 
Current assets Rs m 1,082,270 1,139,163 5.3
Fixed Assets Rs m 351,134 469,640 33.7
Total Assets Rs m 2,783,474 3,081,401 10.7
* 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 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 154,410 63,716 -58.7%
Net Cash Flow Rs m -3,377 46,578 -
* 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 72.9, an improvement from the EPS of Rs 72.8 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 929.5, stands at 14.5 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.4 times, while the price to sales ratio stands at 1.1 times.
  • The company's price to cash flow (P/CF) ratio stood at 10.3 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 964.0 1,036.1
TTM Earnings per share Rs 72.8 72.9
Diluted earnings per share Rs 73.0 73.2
Price to Cash Flow x 10.7 10.3
TTM P/E ratio x 14.6 14.5
Price / Book Value ratio x 3.0 2.4
Market Cap Rs m 1,303,767 1,300,049
Dividends per share (Unadj.) Rs 18.0 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 FY20, from 1.1x 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 5.8x during FY20, from 8.8x 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 15.3% during FY20, from 16.4% 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 10.9% during FY20, from 11.8% 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 declined and down at 4.2% during FY20, from 4.3% 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 1.1 1.1
Debtors’ Days Days 99 102
Interest coverage x 8.8 5.8
Debt to equity ratio x 1.2 1.2
Return on assets % 4.3 4.2
Return on equity % 16.4 15.3
Return on capital employed % 11.8 10.9
* 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 down from Rs 1,379.2 to Rs 929.5, registering a loss of Rs 449.8 or around 32.6%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 12,976.6 (up 0.2%). Over the last one year it has moved down from 17,342.9 to 12,976.6, a loss of 4,366 points (down 25.2%).

Overall, the S&P BSE SENSEX is up 3.9% over the year.

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

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