VARDHMAN TEXTILES 2017-18 Annual Report Analysis

Sat, 31 Mar

VARDHMAN TEXTILES 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.

VARDHMAN TEXTILES Income Statement Analysis

• Operating income during the year rose 4.6% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 24.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.5% in FY18 as against 20.1% in FY17.
• Depreciation charges decreased by 30.1% and finance costs decreased by 8.2% YoY, respectively.
• Other income declined by 64.4% YoY.
• Net profit for the year declined by 39.9% YoY.
• Net profit margins during the year declined from 16.1% in FY17 to 9.2% in FY18.

VARDHMAN TEXTILES Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	59,650	62,366	4.6%
Other income	Rs m	5,539	1,974	-64.4%
Total Revenues	Rs m	65,188	64,339	-1.3%
Gross profit	Rs m	11,993	9,030	-24.7%
Depreciation	Rs m	3,434	2,400	-30.1%
Interest	Rs m	1,287	1,182	-8.2%
Profit before tax	Rs m	12,811	7,421	-42.1%
Tax	Rs m	3,237	1,672	-48.3%
Profit after tax	Rs m	9,574	5,749	-39.9%
Gross profit margin	%	20.1	14.5
Effective tax rate	%	25.3	22.5
Net profit margin	%	16.1	9.2

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VARDHMAN TEXTILES Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 17 billion as compared to Rs 21 billion in FY17, thereby witnessing an decrease of -19.2%.
• Long-term debt stood at Rs 12 billion as compared to Rs 7 billion during FY17, a growth of 62.9%.
• Current assets rose 18% and stood at Rs 45 billion, while fixed assets rose 1% and stood at Rs 37 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 82 billion as against Rs 75 billion during FY17, thereby witnessing a growth of 10%.

VARDHMAN TEXTILES Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	42,732	49,426	15.7
Current Liabilities	Rs m	20,860	16,857	-19.2
Long-term Debt	Rs m	7,427	12,098	62.9
Total Liabilities	Rs m	75,011	82,441	9.9
Current assets	Rs m	38,384	45,456	18.4
Fixed Assets	Rs m	36,627	36,985	1.0
Total Assets	Rs m	75,011	82,441	9.9

VARDHMAN TEXTILES Cash Flow Statement Analysis

• VARDHMAN TEXTILES's cash flow from operating activities (CFO) during FY18 stood at Rs 1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 921 million, an improvement of 108% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 281 million from the Rs -2 billion net cash flows seen during FY17.

VARDHMAN TEXTILES 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	13,503	1,033	-92.3%
Cash Flow from Investing Activities	Rs m	-3,432	-1,673	-
Cash Flow from Financing Activities	Rs m	-11,802	921	-
Net Cash Flow	Rs m	-1,731	281	-

Current Valuations for VARDHMAN TEXTILES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 100.1, an decline from the EPS of Rs 174.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,220.8, stands at 61.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.1 times, while the price to sales ratio stands at 1.1 times.
• The company's price to cash flow (P/CF) ratio stood at 9.5 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	1,086.3	1,085.9
TTM Earnings per share	Rs	174.4	100.1
Diluted earnings per share	Rs	33.1	19.9
Price to Cash Flow	x	29.3	9.5
TTM P/E ratio	x	53.9	61.4
Price / Book Value ratio	x	1.4	1.6
Market Cap	Rs m	60,669	77,364
Dividends per share (Unadj.)	Rs	3.0	3.0

Ratio Analysis for VARDHMAN TEXTILES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.7x during FY18, from 1.8x 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 7.3x during FY18, from 11.0x 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 11.6% during FY18, from 22.4% 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 declined and down at 14.0% during FY18, from 28.1% 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 8.4% during FY18, from 14.5% 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	1.8	2.7
Debtors’ Days	Days	4	4
Interest coverage	x	11.0	7.3
Debt to equity ratio	x	0.2	0.2
Return on assets	%	14.5	8.4
Return on equity	%	22.4	11.6
Return on capital employed	%	28.1	14.0

To see how VARDHMAN TEXTILES has performed over the last 5 years, please visit here.

VARDHMAN TEXTILES Share Price Performance

Over the last one year, VARDHMAN TEXTILES share price has moved down from Rs 1,318.1 to Rs 1,220.8, registering a loss of Rs 97.4 or around 7.4%.

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

(To know more, check out historical annual results for VARDHMAN TEXTILES and quarterly results for VARDHMAN TEXTILES)

Read: Latest Annual Report Analysis of VARDHMAN TEXTILES