NESCO 2017-18 Annual Report Analysis

Sat, 31 Mar

NESCO 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.

NESCO Income Statement Analysis

• Operating income during the year rose 3.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 68.2% in FY18 as against 69.5% in FY17.
• Depreciation charges increased by 35.6% and finance costs increased by 10.9% YoY, respectively.
• Other income declined by 16.1% YoY.
• Net profit for the year grew by 5.2% YoY.
• Net profit margins during the year grew from 55.1% in FY17 to 55.8% in FY18.

NESCO Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	3,086	3,204	3.8%
Other income	Rs m	430	361	-16.1%
Total Revenues	Rs m	3,516	3,565	1.4%
Gross profit	Rs m	2,146	2,185	1.8%
Depreciation	Rs m	81	110	35.6%
Interest	Rs m	50	56	10.9%
Profit before tax	Rs m	2,444	2,379	-2.7%
Tax	Rs m	745	592	-20.5%
Profit after tax	Rs m	1,700	1,787	5.2%
Gross profit margin	%	69.5	68.2
Effective tax rate	%	30.5	24.9
Net profit margin	%	55.1	55.8

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NESCO Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 1 billion as compared to Rs 624 million in FY17, thereby witnessing an increase of 107.8%.
• Current assets fell 2% and stood at Rs 1 billion, while fixed assets rose 17% and stood at Rs 11 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 12 billion as against Rs 10 billion during FY17, thereby witnessing a growth of 14%.

NESCO Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	8,510	10,111	18.8
Current Liabilities	Rs m	624	1,297	107.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	10,332	11,829	14.5
Current assets	Rs m	1,206	1,179	-2.2
Fixed Assets	Rs m	9,126	10,650	16.7
Total Assets	Rs m	10,332	11,829	14.5

NESCO Cash Flow Statement Analysis

• NESCO'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 -1 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -191 million on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 43 million from the Rs -4 million net cash flows seen during FY17.

NESCO 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	1,526	1,462	-4.2%
Cash Flow from Investing Activities	Rs m	-1,530	-1,228	-
Cash Flow from Financing Activities	Rs m	-1	-191	-
Net Cash Flow	Rs m	-4	43	-

Current Valuations for NESCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 25.4, an decline from the EPS of Rs 120.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 551.9, stands at 22.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 12.1 times.
• The company's price to cash flow (P/CF) ratio stood at 63.7 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	219.0	45.5
TTM Earnings per share	Rs	120.6	25.4
Diluted earnings per share	Rs	24.1	25.4
Price to Cash Flow	x	93.1	63.7
TTM P/E ratio	x	95.6	22.0
Price / Book Value ratio	x	3.3	12.0
Market Cap	Rs m	27,929	120,948
Dividends per share (Unadj.)	Rs	2.2	2.3

Ratio Analysis for NESCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY18, from 1.9x 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 43.5x during FY18, from 49.4x 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 17.7% during FY18, from 20.0% 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 declined and down at 24.1% during FY18, from 29.3% 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 15.6% during FY18, from 16.9% 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	1.9	0.9
Debtors’ Days	Days	143	161
Interest coverage	x	49.4	43.5
Debt to equity ratio	x	0.0	0.0
Return on assets	%	16.9	15.6
Return on equity	%	20.0	17.7
Return on capital employed	%	29.3	24.1

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

NESCO Share Price Performance

Over the last one year, NESCO share price has moved down from Rs 2,351.8 to Rs 551.9, registering a loss of Rs 1,799.9 or around 76.5%.

Meanwhile, the S&P BSE REALTY Index is trading at Rs 2,229.9 (down 1.1%). Over the last one year it has moved up from 1,600.0 to 2,229.9, a gain of 630 points (up 39.4%).

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

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

Read: Latest Annual Report Analysis of NESCO