M&M 2019-20 Annual Report Analysis

Tue, 31 Mar

M&M 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.

M&M Income Statement Analysis

• Operating income during the year fell 8.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 41.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 9.4% in FY20 as against 14.7% in FY19.
• Depreciation charges decreased by 15.6% and finance costs increased by 19.9% YoY, respectively.
• Other income declined by 5.2% YoY.
• Net profit for the year declined by 129.3% YoY.
• Net profit margins during the year declined from 4.4% in FY19 to 1.4% in FY20.

M&M Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	1,047,207	955,023	-8.8%
Other income	Rs m	10,856	10,287	-5.2%
Total Revenues	Rs m	1,058,063	965,310	-8.8%
Gross profit	Rs m	154,308	89,712	-41.9%
Depreciation	Rs m	39,908	33,667	-15.6%
Interest	Rs m	50,214	60,212	19.9%
Profit before tax	Rs m	75,043	6,120	-91.8%
Tax	Rs m	28,540	19,756	-30.8%
Profit after tax	Rs m	46,503	-13,636	-129.3%
Gross profit margin	%	14.7	9.4
Effective tax rate	%	38.0	322.8
Net profit margin	%	4.4	-1.4

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M&M Balance Sheet Analysis

• The company's current liabilities during FY20 down at Rs 540 billion as compared to Rs 586 billion in FY19, thereby witnessing an decrease of -7.8%.
• Long-term debt stood at Rs 523 billion as compared to Rs 435 billion during FY19, a growth of 20.2%.
• Current assets fell 8% and stood at Rs 640 billion, while fixed assets rose 10% and stood at Rs 1,017 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 1,657 billion as against Rs 1,619 billion during FY19, thereby witnessing a growth of 2%.

M&M Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	397,495	397,044	-0.1
Current Liabilities	Rs m	586,093	540,095	-7.8
Long-term Debt	Rs m	435,262	522,981	20.2
Total Liabilities	Rs m	1,618,887	1,657,161	2.4
Current assets	Rs m	694,060	640,454	-7.7
Fixed Assets	Rs m	924,826	1,016,707	9.9
Total Assets	Rs m	1,618,887	1,657,161	2.4

M&M Cash Flow Statement Analysis

• M&M's cash flow from operating activities (CFO) during FY20 stood at Rs -15 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -69 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs 69 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -14 billion from the Rs 17 billion net cash flows seen during FY19.

M&M 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	-43,473	-14,569	-
Cash Flow from Investing Activities	Rs m	-71,682	-68,948	-
Cash Flow from Financing Activities	Rs m	131,936	69,328	-47.5%
Net Cash Flow	Rs m	16,724	-13,940	-

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -12.3, an decline from the EPS of Rs 42.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 285.0, stands at -26.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at 26.0 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	962.6	861.5
TTM Earnings per share	Rs	42.7	-12.3
Diluted earnings per share	Rs	37.4	-11.0
Price to Cash Flow	x	9.7	26.0
TTM P/E ratio	x	17.4	-26.0
Price / Book Value ratio	x	2.2	1.3
Market Cap	Rs m	874,576	521,748
Dividends per share (Unadj.)	Rs	8.5	2.4

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.2x during FY20, from 1.2x 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 1.1x during FY20, from 2.5x 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 -3.4% during FY20, from 11.7% 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 7.2% during FY20, from 15.0% 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 2.8% during FY20, from 6.0% 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	1.2	1.2
Debtors’ Days	Days	3	3
Interest coverage	x	2.5	1.1
Debt to equity ratio	x	1.1	1.3
Return on assets	%	6.0	2.8
Return on equity	%	11.7	-3.4
Return on capital employed	%	15.0	7.2

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 671.8 to Rs 285.0, registering a loss of Rs 386.8 or around 57.6%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 10,746.2 (up 1.3%). Over the last one year it has moved down from 18,824.9 to 10,746.2, a loss of 8,079 points (down 42.9%).

Overall, the S&P BSE SENSEX is down 24.2% 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