M&M 2019-20 Annual Report Analysis

Mon, 7 Dec

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 9.1% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 17.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.2% in FY20 as against 14.5% in FY19.
• Depreciation charges increased by 24.7% and finance costs increased by 20.8% YoY, respectively.
• Other income declined by 2.1% YoY.
• Net profit for the year declined by 105.3% YoY.
• Net profit margins during the year declined from 5.7% in FY19 to 0.3% in FY20.

M&M Income Statement 2019-20

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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 8% and stood at Rs 365 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 1,670 billion as against Rs 1,634 billion during FY19, thereby witnessing a growth of 2%.

M&M Balance Sheet as on March 2020

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

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -2.6, an decline from the EPS of Rs 48.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 753.9, stands at -46.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.5 times, while the price to sales ratio stands at 0.6 times.
• The company's price to cash flow (P/CF) ratio stood at 25.9 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 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 1.4x during FY20, from 2.4x 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 -0.8% during FY20, from 15.0% 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 8.4% during FY20, from 16.6% 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 3.4% during FY20, from 6.8% during FY19. 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 510.3 to Rs 753.9, registering a gain of Rs 243.6 or around 47.7%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 21,046.5 (up 0.1%). Over the last one year it has moved up from 17,493.1 to 21,046.5, a gain of 3,553 points (up 20.3%).

Overall, the S&P BSE SENSEX is up 11.7% over the year.

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