POWER GRID 2017-18 Annual Report Analysis

Fri, 21 Dec

POWER GRID 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.

POWER GRID Income Statement Analysis

• Operating income during the year rose 16.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 15.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 87.7% in FY18 as against 88.4% in FY17.
• Depreciation charges increased by 19.5% and finance costs increased by 18.1% YoY, respectively.
• Other income declined by 16.5% YoY.
• Net profit for the year grew by 10.0% YoY.
• Net profit margins during the year declined from 28.3% in FY17 to 26.9% in FY18.

POWER GRID Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	256,974	299,415	16.5%
Other income	Rs m	5,855	4,891	-16.5%
Total Revenues	Rs m	262,830	304,305	15.8%
Gross profit	Rs m	227,274	262,526	15.5%
Depreciation	Rs m	77,223	92,310	19.5%
Interest	Rs m	62,036	73,241	18.1%
Profit before tax	Rs m	93,871	101,866	8.5%
Tax	Rs m	20,063	21,955	9.4%
Profit after tax	Rs m	74,507	81,983	10.0%
Gross profit margin	%	88.4	87.7
Effective tax rate	%	21.4	21.6
Net profit margin	%	28.3	26.9

POWER GRID Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 281 billion as compared to Rs 253 billion in FY17, thereby witnessing an increase of 11.2%.
• Long-term debt stood at Rs 1,227 billion as compared to Rs 1,113 billion during FY17, a growth of 10.3%.
• Current assets rose 11% and stood at Rs 122 billion, while fixed assets rose 10% and stood at Rs 1,939 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 2,143 billion as against Rs 1,956 billion during FY17, thereby witnessing a growth of 10%.

POWER GRID Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	498,655	544,260	9.1
Current Liabilities	Rs m	252,686	281,059	11.2
Long-term Debt	Rs m	1,112,532	1,227,103	10.3
Total Liabilities	Rs m	1,956,450	2,143,267	9.5
Current assets	Rs m	109,749	121,670	10.9
Fixed Assets	Rs m	1,759,422	1,938,668	10.2
Total Assets	Rs m	1,956,450	2,143,267	9.5

POWER GRID Cash Flow Statement Analysis

• POWER GRID's cash flow from operating activities (CFO) during FY18 stood at Rs 227 billion, an improvement of 5.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -257 billion, an improvement of 7.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 13 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -17 billion from the Rs 17 billion net cash flows seen during FY17.

POWER GRID 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	215,753	227,101	5.3%
Cash Flow from Investing Activities	Rs m	-238,360	-257,015	-
Cash Flow from Financing Activities	Rs m	39,586	12,847	-67.5%
Net Cash Flow	Rs m	16,979	-17,067	-

Current Valuations for POWER GRID

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.7, an improvement from the EPS of Rs 14.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 197.9, stands at 13.1 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 3.6 times.
• The company's price to cash flow (P/CF) ratio stood at 6.0 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	49.1	57.2
TTM Earnings per share	Rs	14.2	15.7
Diluted earnings per share	Rs	14.2	15.7
Price to Cash Flow	x	6.9	6.0
TTM P/E ratio	x	13.1	13.1
Price / Book Value ratio	x	1.8	2.0
Market Cap	Rs m	1,035,332	1,035,330
Dividends per share (Unadj.)	Rs	4.4	5.3

Ratio Analysis for POWER GRID

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.4x during FY18, from 0.4x 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 2.4x during FY18, from 2.5x 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 improved and stood at 15.1% during FY18, from 14.9% 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 10.0% during FY18, from 9.7% 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 improved and stood at 7.2% during FY18, from 7.0% 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	0.4	0.4
Debtors’ Days	Days	44	44
Interest coverage	x	2.5	2.4
Debt to equity ratio	x	2.2	2.3
Return on assets	%	7.0	7.2
Return on equity	%	14.9	15.1
Return on capital employed	%	9.7	10.0

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

POWER GRID Share Price Performance

Over the last one year, POWER GRID share price has moved up from Rs 203.7 to Rs 197.9, registering a loss of Rs 5.8 or around 2.8%.

Meanwhile, the S&P BSE POWER Index is trading at Rs 2,005.6 (up 0.3%). Over the last one year it has moved down from 2,346.9 to 2,005.6, a loss of 341 points (down 14.5%).

Overall, the S&P BSE SENSEX is up 7.6% over the year.

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