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

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	837,731	920,940	9.9%
Other income	Rs m	7,301	6,310	-13.6%
Total Revenues	Rs m	845,032	927,250	9.7%
Gross profit	Rs m	107,348	132,261	23.2%
Depreciation	Rs m	28,127	32,799	16.6%
Interest	Rs m	36,485	39,871	9.3%
Profit before tax	Rs m	50,038	65,901	31.7%
Tax	Rs m	22,997	23,677	3.0%
Profit after tax	Rs m	40,505	79,578	96.5%
Gross profit margin	%	12.8	14.4
Effective tax rate	%	46.0	35.9
Net profit margin	%	4.8	8.6

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

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	297,380	367,752	23.7
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	1,147,422	1,372,109	19.6
Current assets	Rs m	478,778	590,760	23.4
Fixed Assets	Rs m	252,680	304,514	20.5
Total Assets	Rs m	1,147,422	1,372,109	19.6

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 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

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	1,546.3	740.8
TTM Earnings per share	Rs	74.8	64.0
Diluted earnings per share	Rs	32.6	64.1
Price to Cash Flow	x	8.5	11.4
TTM P/E ratio	x	10.5	24.0
Price / Book Value ratio	x	2.4	3.8
Market Cap	Rs m	505,210	1,158,337
Dividends per share (Unadj.)	Rs	13.0	7.5

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

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.2	1.2
Debtors’ Days	Days	31	34
Interest coverage	x	2.4	2.7
Debt to equity ratio	x	1.0	0.9
Return on assets	%	6.7	8.7
Return on equity	%	13.6	21.6
Return on capital employed	%	16.7	20.3

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)