M&M 2017-18 Annual Report Analysis

Sat, 31 Mar

M&M has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

M&M Income Statement Analysis

• Operating income during the year rose 15.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 41.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 17.4% in FY18 as against 14.2% in FY17.
• Depreciation charges increased by 16.6% and finance costs increased by 9.3% YoY, respectively.
• Other income declined by 13.6% YoY.
• Net profit for the year grew by 117.4% YoY.
• Net profit margins during the year grew from 4.0% in FY17 to 7.5% in FY18.

M&M Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	785,631	909,231	15.7%
Other income	Rs m	7,301	6,310	-13.6%
Total Revenues	Rs m	792,932	915,542	15.5%
Gross profit	Rs m	111,819	158,542	41.8%
Depreciation	Rs m	28,127	32,799	16.6%
Interest	Rs m	36,485	39,871	9.3%
Profit before tax	Rs m	54,509	92,183	69.1%
Tax	Rs m	22,997	23,677	3.0%
Profit after tax	Rs m	31,511	68,505	117.4%
Gross profit margin	%	14.2	17.4
Effective tax rate	%	42.2	25.7
Net profit margin	%	4.0	7.5

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M&M Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 491 billion as compared to Rs 398 billion in FY17, thereby witnessing an increase of 23.4%.
• Long-term debt stood at Rs 338 billion as compared to Rs 301 billion during FY17, a growth of 12.2%.
• Current assets rose 21% and stood at Rs 591 billion, while fixed assets rose 19% and stood at Rs 773 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 1,364 billion as against Rs 1,138 billion during FY17, thereby witnessing a growth of 20%.

M&M Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	295,212	365,459	23.8
Current Liabilities	Rs m	398,325	491,495	23.4
Long-term Debt	Rs m	301,245	338,092	12.2
Total Liabilities	Rs m	1,138,355	1,363,693	19.8
Current assets	Rs m	487,878	590,760	21.1
Fixed Assets	Rs m	650,477	772,933	18.8
Total Assets	Rs m	1,138,355	1,363,693	19.8

M&M Cash Flow Statement Analysis

• M&M's cash flow from operating activities (CFO) during FY18 stood at Rs 7 billion, an improvement of 272.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -55 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 63 billion, an improvement of 3% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 15 billion from the Rs 4 billion net cash flows seen during FY17.

M&M Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	1,831	6,819	272.4%
Cash Flow from Investing Activities	Rs m	-58,754	-54,679	-
Cash Flow from Financing Activities	Rs m	61,080	63,145	3.4%
Net Cash Flow	Rs m	4,158	15,291	267.8%

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 63.1, an improvement from the EPS of Rs 58.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 740.2, stands at 21.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.4 times, while the price to sales ratio stands at 1.4 times.
• The company's price to cash flow (P/CF) ratio stood at 12.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	1,450.1	837.0
TTM Earnings per share	Rs	58.2	63.1
Diluted earnings per share	Rs	25.3	55.1
Price to Cash Flow	x	26.8	12.2
TTM P/E ratio	x	41.4	21.0
Price / Book Value ratio	x	2.4	3.4
Market Cap	Rs m	718,015	1,233,668
Dividends per share (Unadj.)	Rs	13.0	7.5

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.2x during FY18, from 1.2x during FY17. 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 3.3x during FY18, from 2.5x during FY17. 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 18.7% during FY18, from 10.7% during FY18. 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 18.8% during FY18, from 15.3% during FY17. 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 7.9% during FY18, from 6.0% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.2	1.2
Debtors’ Days	Days	3	3
Interest coverage	x	2.5	3.3
Debt to equity ratio	x	1.0	0.9
Return on assets	%	6.0	7.9
Return on equity	%	10.7	18.7
Return on capital employed	%	15.3	18.8

To see how M&M has performed over the last 5 years, please visit here.

M&M Share Price Performance

Over the last one year, M&M share price has moved down from Rs 1,284.7 to Rs 740.2, registering a loss of Rs 544.5 or around 42.4%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 24,057.3 (down 0.1%). Over the last one year it has moved up from 22,012.7 to 24,057.3, a gain of 2,045 points (up 9.3%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of M&M