M&M 2017-18 Annual Report Analysis

Thu, 9 Aug

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 9.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 23.2% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.4% in FY18 as against 12.8% in FY17.
• Depreciation charges and finance costs increased by 16.6% YoY and 9.3% YoY, respectively.
• Other income declined by 13.6% YoY.
• Net profit for the year grew by 96.5% YoY.
• Net profit margins during the year grew from 4.8% in FY17 to 8.6% in FY18.

M&M Income Statement 2017-18

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 23% and stood at Rs 591 billion, while fixed assets rose 21% and stood at Rs 305 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 1,372 billion as against Rs 1,147 billion during FY17, thereby witnessing a growth of 20%.

M&M Balance Sheet as on March 2018

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

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 64.0, an decline from the EPS of Rs 74.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 932.5, stands at 24.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 11.4 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio improved 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 deteriorated and stood at 2.7x during FY18, from 2.4x 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 21.6% during FY18, from 13.6% 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 20.3% during FY18, from 16.7% 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 8.7% during FY18, from 6.7% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

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 up from Rs 695.7 to Rs 932.5, registering a gain of Rs 236.8 or around 34.0%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 24,172.7 (down 0.1%). Over the last one year it has moved down from 24,323.1 to 24,172.7, a gain of 150 points (down 0.6%).

Overall, the S&P BSE SENSEX is up 18.8% over the year.

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