POWER GRID 2018-19 Annual Report Analysis

Sun, 31 Mar

POWER GRID 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.

POWER GRID Income Statement Analysis

• Operating income during the year rose 17.0% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 5.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 79.0% in FY19 as against 98.2% in FY18.
• Depreciation charges increased by 14.2% and finance costs increased by 20.8% YoY, respectively.
• Other income grew by 50.4% YoY.
• Net profit for the year grew by 22.9% YoY.
• Net profit margins during the year grew from 26.9% in FY18 to 28.3% in FY19.

POWER GRID Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	299,536	350,591	17.0%
Other income	Rs m	4,769	7,173	50.4%
Total Revenues	Rs m	304,305	357,764	17.6%
Gross profit	Rs m	294,010	276,906	-5.8%
Depreciation	Rs m	92,310	105,410	14.2%
Interest	Rs m	73,241	88,486	20.8%
Profit before tax	Rs m	133,228	90,184	-32.3%
Tax	Rs m	52,668	-8,864	-116.8%
Profit after tax	Rs m	80,561	99,047	22.9%
Gross profit margin	%	98.2	79.0
Effective tax rate	%	39.5	-9.8
Net profit margin	%	26.9	28.3

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POWER GRID Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 498 billion as compared to Rs 398 billion in FY18, thereby witnessing an increase of 25.1%.
• Long-term debt stood at Rs 1,313 billion as compared to Rs 1,227 billion during FY18, a growth of 7.0%.
• Current assets rose 34% and stood at Rs 253 billion, while fixed assets rose 9% and stood at Rs 2,179 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 2,550 billion as against Rs 2,320 billion during FY18, thereby witnessing a growth of 10%.

POWER GRID Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	544,260	590,884	8.6
Current Liabilities	Rs m	397,611	497,547	25.1
Long-term Debt	Rs m	1,227,103	1,313,295	7.0
Total Liabilities	Rs m	2,320,038	2,550,403	9.9
Current assets	Rs m	188,548	253,446	34.4
Fixed Assets	Rs m	1,990,601	2,178,846	9.5
Total Assets	Rs m	2,320,038	2,550,403	9.9

POWER GRID Cash Flow Statement Analysis

• POWER GRID's cash flow from operating activities (CFO) during FY19 stood at Rs 233 billion, an improvement of 2.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -187 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -24 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 21 billion from the Rs -17 billion net cash flows seen during FY18.

POWER GRID 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	227,101	232,712	2.5%
Cash Flow from Investing Activities	Rs m	-257,014	-187,275	-
Cash Flow from Financing Activities	Rs m	12,847	-24,308	-
Net Cash Flow	Rs m	-17,067	21,129	-

Current Valuations for POWER GRID

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 18.9, an improvement from the EPS of Rs 15.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 198.1, stands at 9.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.3 times, while the price to sales ratio stands at 3.0 times.
• The company's price to cash flow (P/CF) ratio stood at 5.0 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	57.3	67.0
TTM Earnings per share	Rs	15.4	18.9
Diluted earnings per share	Rs	11.5	14.2
Price to Cash Flow	x	7.8	5.0
TTM P/E ratio	x	16.7	9.5
Price / Book Value ratio	x	2.0	1.7
Market Cap	Rs m	1,086,601	1,020,291
Dividends per share (Unadj.)	Rs	5.3	8.3

Ratio Analysis for POWER GRID

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.5x during FY19, from 0.5x 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 deteriorated and stood at 2.0x during FY19, from 2.8x 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 16.8% during FY19, from 14.8% 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 declined and down at 9.4% during FY19, from 11.7% 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 7.4% during FY19, from 6.6% 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	0.5	0.5
Debtors’ Days	Days	4	5
Interest coverage	x	2.8	2.0
Debt to equity ratio	x	2.3	2.2
Return on assets	%	6.6	7.4
Return on equity	%	14.8	16.8
Return on capital employed	%	11.7	9.4

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 193.9 to Rs 198.1, registering a gain of Rs 4.3 or around 2.2%.

Meanwhile, the S&P BSE POWER Index is trading at Rs 2,034.4 (up 0.7%). Over the last one year it has moved down from 2,125.8 to 2,034.4, a loss of 91 points (down 4.3%).

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

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

Read: Latest Annual Report Analysis of POWER GRID