NALCO 2018-19 Annual Report Analysis

Sun, 31 Mar

NALCO has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

NALCO Income Statement Analysis

• Operating income during the year rose 22.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 30.2% YoY during the fiscal. Operating profit margins witnessed a fall and down at 25.1% in FY19 as against 23.6% in FY18.
• Depreciation charges decreased by 0.9% and finance costs increased by 22.1% YoY, respectively.
• Other income grew by 9.5% YoY.
• Net profit for the year grew by 29.1% YoY.
• Net profit margins during the year grew from 14.3% in FY18 to 15.1% in FY19.

NALCO Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	94,006	114,993	22.3%
Other income	Rs m	3,026	3,315	9.5%
Total Revenues	Rs m	97,032	118,309	21.9%
Gross profit	Rs m	22,185	28,882	30.2%
Depreciation	Rs m	4,804	4,761	-0.9%
Interest	Rs m	20	24	22.1%
Profit before tax	Rs m	20,388	27,412	34.5%
Tax	Rs m	6,964	10,075	44.7%
Profit after tax	Rs m	13,424	17,337	29.1%
Gross profit margin	%	23.6	25.1
Effective tax rate	%	34.2	36.8
Net profit margin	%	14.3	15.1

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NALCO Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 29 billion as compared to Rs 24 billion in FY18, thereby witnessing an increase of 19.0%.
• Current assets rose 2% and stood at Rs 56 billion, while fixed assets rose 5% and stood at Rs 95 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 151 billion as against Rs 146 billion during FY18, thereby witnessing a growth of 4%.

NALCO Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	105,040	104,849	-0.2
Current Liabilities	Rs m	24,409	29,051	19.0
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	146,129	151,474	3.7
Current assets	Rs m	55,095	56,007	1.7
Fixed Assets	Rs m	91,035	95,467	4.9
Total Assets	Rs m	146,129	151,474	3.7

NALCO Cash Flow Statement Analysis

• NALCO's cash flow from operating activities (CFO) during FY19 stood at Rs 24 billion, an improvement of 51.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -5 billion, an improvement of 8.5% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -17 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 1 billion from the Rs 5 million net cash flows seen during FY18.

NALCO Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	15,903	24,089	51.5%
Cash Flow from Investing Activities	Rs m	-4,902	-5,319	-
Cash Flow from Financing Activities	Rs m	-10,997	-17,308	-
Net Cash Flow	Rs m	5	1,463	28,025.0%

Current Valuations for NALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 9.3, an improvement from the EPS of Rs 6.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 55.4, stands at 5.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.0 times, while the price to sales ratio stands at 0.9 times.
• The company's price to cash flow (P/CF) ratio stood at 5.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	48.6	61.6
TTM Earnings per share	Rs	6.9	9.3
Diluted earnings per share	Rs	7.3	9.4
Price to Cash Flow	x	6.7	5.8
TTM P/E ratio	x	9.1	5.9
Price / Book Value ratio	x	1.5	1.2
Market Cap	Rs m	153,185	127,235
Dividends per share (Unadj.)	Rs	5.7	5.8

Ratio Analysis for NALCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.9x during FY19, from 2.3x during FY18. 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 1,152.8x during FY19, from 1,046.6x during FY18. 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 16.5% during FY19, from 12.8% during FY19. 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 26.2% during FY19, from 19.4% during FY18. 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 11.5% during FY19, from 9.2% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	2.3	1.9
Debtors’ Days	Days	1	1
Interest coverage	x	1,046.6	1,152.8
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.2	11.5
Return on equity	%	12.8	16.5
Return on capital employed	%	19.4	26.2

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

NALCO Share Price Performance

Over the last one year, NALCO share price has moved down from Rs 66.8 to Rs 55.4, registering a loss of Rs 11.4 or around 17.0%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 11,355.1 (up 2.3%). Over the last one year it has moved down from 13,322.0 to 11,355.1, a loss of 1,967 points (down 14.8%).

Overall, the S&P BSE SENSEX is up 16.3% over the year.

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

Read: Latest Annual Report Analysis of NALCO