L&T 2020-21 Annual Report Analysis

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L&T 2020-21 Annual Report Analysis
Mon, 26 Jul

L&T has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

L&T Income Statement Analysis

  • Operating income during the year fell 6.5% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 21.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 12.8% in FY21 as against 15.3% in FY20.
  • Depreciation charges increased by 17.9% and finance costs increased by 7.0% YoY, respectively.
  • Other income grew by 190.1% YoY.
  • Net profit for the year grew by 19.3% YoY.
  • Net profit margins during the year grew from 7.2% in FY20 to 8.4% in FY21.

L&T Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 1,454,524 1,359,790 -6.5%
Other income Rs m 58,290 169,099 190.1%
Total Revenues Rs m 1,512,813 1,528,889 1.1%
Gross profit Rs m 222,169 173,865 -21.7%
Depreciation Rs m 24,623 29,042 17.9%
Interest Rs m 112,695 120,597 7.0%
Profit before tax Rs m 143,142 193,325 35.1%
Tax Rs m 34,919 64,256 84.0%
Profit after tax Rs m 108,223 129,069 19.3%
Gross profit margin % 15.3 12.8
Effective tax rate % 24.4 33.2
Net profit margin % 7.2 8.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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L&T Balance Sheet Analysis

  • The company's current liabilities during FY21 down at Rs 1,374 billion as compared to Rs 1,447 billion in FY20, thereby witnessing an decrease of -5.1%.
  • Long-term debt down at Rs 821 billion as compared to Rs 823 billion during FY20, a fall of 0.3%.
  • Current assets rose 7% and stood at Rs 1,950 billion, while fixed assets fell 7% and stood at Rs 1,136 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 3,086 billion as against Rs 3,043 billion during FY20, thereby witnessing a growth of 1%.

L&T Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 663,217 754,849 13.8
 
Current Liabilities Rs m 1,447,292 1,374,080 -5.1
Long-term Debt Rs m 823,313 821,200 -0.3
Total Liabilities Rs m 3,042,936 3,085,767 1.4
 
Current assets Rs m 1,826,899 1,949,668 6.7
Fixed Assets Rs m 1,216,037 1,136,099 -6.6
Total Assets Rs m 3,042,936 3,085,767 1.4
* 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 FY21 stood at Rs 228 billion, an improvement of 241.3% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -54 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -153 billion on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs 21 billion from the Rs 47 billion net cash flows seen during FY20.

L&T Cash Flow Statement 2020-21

Particulars No. of months 12 12 % Change
Year Ending Mar-20 Mar-21
Cash Flow from Operating Activities Rs m 66,939 228,441 241.3%
Cash Flow from Investing Activities Rs m -82,563 -54,288 -
Cash Flow from Financing Activities Rs m 63,716 -152,744 -
Net Cash Flow Rs m 46,577 21,391 -54.1%
* 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 91.9, an improvement from the EPS of Rs 77.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,600.0, stands at 48.1 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.2 times, while the price to sales ratio stands at 1.2 times.
  • The company's price to cash flow (P/CF) ratio stood at 14.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-20* 12 Mar-21*
Sales per share (Unadj.) Rs 1,036.1 968.1
TTM Earnings per share Rs 77.1 91.9
Diluted earnings per share Rs 77.0 91.9
Price to Cash Flow x 16.9 14.2
TTM P/E ratio x 48.1 48.1
Price / Book Value ratio x 2.4 2.2
Market Cap Rs m 2,246,227 2,247,368
Dividends per share (Unadj.) Rs 18.0 0.0
* 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 1.4x during FY21, from 1.3x during FY20. 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 2.6x during FY21, from 2.3x during FY20. 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 17.1% during FY21, from 16.3% during FY21. 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 19.9% during FY21, from 17.2% during FY20. 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 8.1% during FY21, from 7.3% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-20* 12 Mar-21*
Current ratio x 1.3 1.4
Debtors’ Days Days 10 11
Interest coverage x 2.3 2.6
Debt to equity ratio x 1.2 1.1
Return on assets % 7.3 8.1
Return on equity % 16.3 17.1
Return on capital employed % 17.2 19.9
* 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 up from Rs 904.6 to Rs 1,600.0, registering a gain of Rs 695.5 or around 76.9%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 23,735.6 (down 0.5%). Over the last one year it has moved up from 12,812.9 to 23,735.6, a gain of 10,923 points (up 85.2%).

Overall, the S&P BSE SENSEX is up 39.6% over the year.

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

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For the quarter ended June 2021, L&T has posted a net profit of Rs 16 bn (up 143.9% YoY). Sales on the other hand came in at Rs 293 bn (up 38.0% YoY). Read on for a complete analysis of L&T's quarterly results.

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