CHENNAI PETROLEUM 2017-18 Annual Report Analysis

Sat, 31 Mar

CHENNAI PETROLEUM 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.

CHENNAI PETROLEUM Income Statement Analysis

• Operating income during the year rose 44.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 10.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.0% in FY18 as against 13.0% in FY17.
• Depreciation charges increased by 22.1% and finance costs increased by 17.5% YoY, respectively.
• Other income declined by 3.8% YoY.
• Net profit for the year declined by 11.3% YoY.
• Net profit margins during the year declined from 7.1% in FY17 to 4.3% in FY18.

CHENNAI PETROLEUM Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	144,324	208,668	44.6%
Other income	Rs m	341	328	-3.8%
Total Revenues	Rs m	144,665	208,996	44.5%
Gross profit	Rs m	18,768	20,822	10.9%
Depreciation	Rs m	2,786	3,402	22.1%
Interest	Rs m	2,738	3,219	17.5%
Profit before tax	Rs m	13,585	14,530	7.0%
Tax	Rs m	3,353	5,453	62.6%
Profit after tax	Rs m	10,232	9,077	-11.3%
Gross profit margin	%	13.0	10.0
Effective tax rate	%	24.7	37.5
Net profit margin	%	7.1	4.3

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CHENNAI PETROLEUM Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 90 billion as compared to Rs 60 billion in FY17, thereby witnessing an increase of 51.3%.
• Long-term debt down at Rs 8 billion as compared to Rs 23 billion during FY17, a fall of 64.5%.
• Current assets rose 35% and stood at Rs 67 billion, while fixed assets rose 19% and stood at Rs 83 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 150 billion as against Rs 119 billion during FY17, thereby witnessing a growth of 25%.

CHENNAI PETROLEUM Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	34,411	39,970	16.2
Current Liabilities	Rs m	59,722	90,382	51.3
Long-term Debt	Rs m	23,243	8,259	-64.5
Total Liabilities	Rs m	119,354	149,606	25.3
Current assets	Rs m	49,713	66,879	34.5
Fixed Assets	Rs m	69,471	82,538	18.8
Total Assets	Rs m	119,354	149,606	25.3

CHENNAI PETROLEUM Cash Flow Statement Analysis

• CHENNAI PETROLEUM's cash flow from operating activities (CFO) during FY18 stood at Rs 28 billion, an improvement of 352.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -10 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -18 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -2 million from the Rs 2 million net cash flows seen during FY17.

CHENNAI PETROLEUM 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	6,087	27,567	352.9%
Cash Flow from Investing Activities	Rs m	-11,693	-9,692	-
Cash Flow from Financing Activities	Rs m	5,607	-17,877	-
Net Cash Flow	Rs m	2	-2	-

Current Valuations for CHENNAI PETROLEUM

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 61.0, an decline from the EPS of Rs 68.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 328.5, stands at 5.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 4.7 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	969.2	1,401.3
TTM Earnings per share	Rs	68.7	61.0
Diluted earnings per share	Rs	68.7	61.0
Price to Cash Flow	x	4.1	4.7
TTM P/E ratio	x	5.2	5.4
Price / Book Value ratio	x	1.3	1.5
Market Cap	Rs m	43,478	58,664
Dividends per share (Unadj.)	Rs	21.0	18.5

Ratio Analysis for CHENNAI PETROLEUM

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.7x during FY18, from 0.8x 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 5.5x during FY18, from 6.0x 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 declined and down at 22.7% during FY18, from 29.7% 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 36.8% during FY18, from 28.3% 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 declined and down at 8.2% during FY18, from 10.9% 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	0.8	0.7
Debtors’ Days	Days	263	3
Interest coverage	x	6.0	5.5
Debt to equity ratio	x	0.7	0.2
Return on assets	%	10.9	8.2
Return on equity	%	29.7	22.7
Return on capital employed	%	28.3	36.8

To see how CHENNAI PETROLEUM has performed over the last 5 years, please visit here.

CHENNAI PETROLEUM Share Price Performance

Over the last one year, CHENNAI PETROLEUM share price has moved down from Rs 362.8 to Rs 328.5, registering a loss of Rs 34.3 or around 9.4%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 14,614.4 (up 0.1%). Over the last one year it has moved up from 13,563.6 to 14,614.4, a gain of 1,051 points (up 7.7%).

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

(To know more, check out historical annual results for CHENNAI PETROLEUM and quarterly results for CHENNAI PETROLEUM)

Read: Latest Annual Report Analysis of CHENNAI PETROLEUM