MTNL 2017-18 Annual Report Analysis

Sat, 31 Mar

MTNL 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.

MTNL Income Statement Analysis

• Operating income during the year fell 16.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 8.8% YoY during the fiscal. Operating profit margins witnessed a growth and stood at 46.8% in FY18 as against 35.8% in FY17.
• Depreciation charges decreased by 5.4% and finance costs increased by 3.9% YoY, respectively.
• Other income grew by 8.8% YoY.
• Net profit for the year grew by 1.2% YoY.
• Net profit margins during the year declined from 98.9% in FY17 to 120.2% in FY18.

MTNL Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	29,694	24,724	-16.7%
Other income	Rs m	6,853	7,453	8.8%
Total Revenues	Rs m	36,547	32,178	-12.0%
Gross profit	Rs m	-10,638	-11,570	8.8%
Depreciation	Rs m	11,133	10,535	-5.4%
Interest	Rs m	14,485	15,055	3.9%
Profit before tax	Rs m	-29,403	-29,706	1.0%
Tax	Rs m	-35	9	-125.4%
Profit after tax	Rs m	-29,367	-29,715	1.2%
Gross profit margin	%	-35.8	-46.8
Effective tax rate	%	0.1	0.0
Net profit margin	%	-98.9	-120.2

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MTNL Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 91 billion as compared to Rs 106 billion in FY17, thereby witnessing an decrease of -14.4%.
• Long-term debt stood at Rs 103 billion as compared to Rs 70 billion during FY17, a growth of 46.8%.
• Current assets rose 2% and stood at Rs 50 billion, while fixed assets fell 12% and stood at Rs 112 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 163 billion as against Rs 177 billion during FY17, thereby witnessing a fall of 8%.

MTNL Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	-33,739	-63,320	87.7
Current Liabilities	Rs m	106,134	90,857	-14.4
Long-term Debt	Rs m	70,113	102,927	46.8
Total Liabilities	Rs m	176,933	162,912	-7.9
Current assets	Rs m	49,629	50,432	1.6
Fixed Assets	Rs m	127,304	112,480	-11.6
Total Assets	Rs m	176,933	162,912	-7.9

MTNL Cash Flow Statement Analysis

• MTNL's cash flow from operating activities (CFO) during FY18 stood at Rs 2 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -5 billion, an improvement of 1,525.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 3 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 73 million from the Rs -707 million net cash flows seen during FY17.

MTNL 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	-10,243	1,547	-
Cash Flow from Investing Activities	Rs m	-303	-4,921	-
Cash Flow from Financing Activities	Rs m	9,839	3,446	-65.0%
Net Cash Flow	Rs m	-707	73	-

Current Valuations for MTNL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -47.2, an decline from the EPS of Rs -46.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 18.9, stands at -0.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at -0.2 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at -0.8 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	47.1	39.2
TTM Earnings per share	Rs	-46.6	-47.2
Diluted earnings per share	Rs	-46.6	-47.2
Price to Cash Flow	x	-0.8	-0.8
TTM P/E ratio	x	-0.5	-0.4
Price / Book Value ratio	x	-0.4	-0.2
Market Cap	Rs m	13,073	15,136
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for MTNL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.6x during FY18, from 0.5x 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 improved and stood at -1.0x during FY18, from -1.0x 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 46.9% during FY18, from 87.0% 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 -37.0% during FY18, from -41.0% 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 -9.0% during FY18, from -8.4% 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	0.5	0.6
Debtors’ Days	Days	6	6
Interest coverage	x	-1.0	-1.0
Debt to equity ratio	x	-2.1	-1.6
Return on assets	%	-8.4	-9.0
Return on equity	%	87.0	46.9
Return on capital employed	%	-41.0	-37.0

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

MTNL Share Price Performance

Over the last one year, MTNL share price has moved down from Rs 24.0 to Rs 18.9, registering a loss of Rs 5.2 or around 21.5%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 6,513.3 (down 0.7%). Over the last one year it has moved up from 5,771.5 to 6,513.3, a gain of 742 points (up 12.9%).

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

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

Read: Latest Annual Report Analysis of MTNL