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MRF 2019-20 Annual Report Analysis
Tue, 31 Mar

MRF 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.

MRF Income Statement Analysis

  • Operating income during the year rose 1.1% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 3.1% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.7% in FY20 as against 14.4% in FY19.
  • Depreciation charges increased by 21.6% and finance costs increased by 10.0% YoY, respectively.
  • Other income declined by 20.5% YoY.
  • Net profit for the year grew by 25.8% YoY.
  • Net profit margins during the year grew from 7.0% in FY19 to 8.8% in FY20.

MRF Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 160,625 162,394 1.1%
Other income Rs m 4,217 3,354 -20.5%
Total Revenues Rs m 164,842 165,747 0.5%
Gross profit Rs m 23,115 23,820 3.1%
Depreciation Rs m 8,076 9,823 21.6%
Interest Rs m 2,734 3,008 10.0%
Profit before tax Rs m 16,522 14,343 -13.2%
Tax Rs m 5,216 117 -97.8%
Profit after tax Rs m 11,306 14,226 25.8%
Gross profit margin % 14.4 14.7
Effective tax rate % 31.6 0.8
Net profit margin % 7.0 8.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



New Research: 2 stocks to buy as Nifty50 heads towards 40,000

MRF Balance Sheet Analysis

  • The company's current liabilities during FY20 down at Rs 53 billion as compared to Rs 55 billion in FY19, thereby witnessing an decrease of -3.9%.
  • Long-term debt down at Rs 8 billion as compared to Rs 11 billion during FY19, a fall of 26.1%.
  • Current assets fell 4% and stood at Rs 82 billion, while fixed assets rose 13% and stood at Rs 113 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 194 billion as against Rs 184 billion during FY19, thereby witnessing a growth of 5%.

MRF Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 108,374 122,147 12.7
 
Current Liabilities Rs m 54,644 52,522 -3.9
Long-term Debt Rs m 10,547 7,790 -26.1
Total Liabilities Rs m 184,412 194,423 5.4
 
Current assets Rs m 84,638 81,510 -3.7
Fixed Assets Rs m 99,774 112,913 13.2
Total Assets Rs m 184,412 194,423 5.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



MRF Cash Flow Statement Analysis

  • MRF's cash flow from operating activities (CFO) during FY20 stood at Rs 23 billion, an improvement of 81.3% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs -2 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs -10 billion on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs 11 billion from the Rs -911 million net cash flows seen during FY19.

MRF 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 12,529 22,712 81.3%
Cash Flow from Investing Activities Rs m -13,862 -1,637 -
Cash Flow from Financing Activities Rs m 422 -10,324 -
Net Cash Flow Rs m -911 10,766 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for MRF

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 3,355.1, an improvement from the EPS of Rs 2,666.5 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 58,241.7, stands at 17.4 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.0 times, while the price to sales ratio stands at 1.5 times.
  • The company's price to cash flow (P/CF) ratio stood at 10.9 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 37,883.2 38,300.4
TTM Earnings per share Rs 2,666.5 3,355.1
Diluted earnings per share Rs 2,665.8 3,354.2
Price to Cash Flow x 12.7 10.9
TTM P/E ratio x 22.4 17.4
Price / Book Value ratio x 2.6 2.1
Market Cap Rs m 286,962 261,888
Dividends per share (Unadj.) Rs 60.0 100.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for MRF

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 1.6x during FY20, from 1.5x 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 5.8x during FY20, from 7.0x 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 improved and stood at 11.6% during FY20, from 10.4% 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 13.4% during FY20, from 16.2% 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 improved and stood at 8.9% during FY20, from 7.6% 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 1.5 1.6
Debtors’ Days Days 5 5
Interest coverage x 7.0 5.8
Debt to equity ratio x 0.1 0.1
Return on assets % 7.6 8.9
Return on equity % 10.4 11.6
Return on capital employed % 16.2 13.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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

MRF Share Price Performance

Over the last one year, MRF share price has moved up from Rs 58,056.3 to Rs 58,241.7, registering a gain of Rs 185.4 or around 0.3%.

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

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

Annual Report FAQs

What is the current share price of MRF?

MRF currently trades at Rs 133,294.0 per share. You can check out the latest share price performance of MRF here...

What was the revenue of MRF in FY20? How does it compare to earlier years?

The revenues of MRF stood at Rs 165,747 m in FY20, which was up 0.5% compared to Rs 164,842 m reported in FY19.

MRF's revenue has fallen from Rs 181,931 m in FY16 to Rs 165,747 m in FY20.

Over the past 5 years, the revenue of MRF has grown at a CAGR of -2.3%.

What was the net profit of MRF in FY20? How does it compare to earlier years?

The net profit of MRF stood at Rs 14,226 m in FY20, which was up 25.8% compared to Rs 11,306 m reported in FY19.

This compares to a net profit of Rs 11,316 m in FY18 and a net profit of Rs 14,862 m in FY17.

Over the past 5 years, MRF net profit has grown at a CAGR of -13.2%.

What does the cash flow statement of MRF reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of MRF reveals:

  • Cash flow from operations increased in FY20 and stood at Rs 22,712 m as compared to Rs 12,529 m in FY19.
  • Cash flow from investments increased in FY20 and stood at Rs -1,637 m as compared to Rs -13,862 m in FY19.
  • Cash flow from financial activity decreased in FY20 and stood at Rs -10,324 m as compared to Rs 422 m in FY19.

Here's the cash flow statement of MRF for the past 5 years.

(Rs m)FY16FY17FY18FY19FY20
From Operations30,43519,55724,13012,52922,712
From Investments-34,078-13,927-20,139-13,862-1,637
From Financial Activity2,123-4,376-4,526422-10,324
Net Cashflow-1,5201,254-535-91110,766

What does the Key Ratio analysis of MRF reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of MRF reveals:

  • Operating profit margins witnessed a fall and down at 14.7% in FY20 as against 14.4% in FY19.
  • Net profit margins grew from 7.0% in FY19 to 8.8% in FY20.
  • Debt to Equity ratio for FY20 stood at 0.1 as compared to 0.1 in FY19.

Here's the ratio/financial analysis of MRF for the past 5 years.

 FY16FY17FY18FY19FY20
Operating Profit Margin (%)24.822.215.714.414.7
Net Profit Margin (%)14.012.57.87.08.8
Debt to Equity Ratio (x)0.20.10.10.10.1

Read: Latest Annual Report Analysis of MRF

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