RCF 2017-18 Annual Report Analysis

Sat, 31 Mar

RCF 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.

RCF Income Statement Analysis

• Operating income during the year rose 3.6% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 43.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 2.9% in FY18 as against 5.4% in FY17.
• Depreciation charges decreased by 2.9% and finance costs decreased by 29.9% YoY, respectively.
• Other income grew by 7.8% YoY.
• Net profit for the year declined by 56.0% YoY.
• Net profit margins during the year declined from 2.6% in FY17 to 1.1% in FY18.

RCF Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	69,742	72,279	3.6%
Other income	Rs m	1,114	1,200	7.8%
Total Revenues	Rs m	70,855	73,480	3.7%
Gross profit	Rs m	3,740	2,122	-43.3%
Depreciation	Rs m	1,411	1,370	-2.9%
Interest	Rs m	955	669	-29.9%
Profit before tax	Rs m	2,487	1,282	-48.5%
Tax	Rs m	695	494	-28.9%
Profit after tax	Rs m	1,793	788	-56.0%
Gross profit margin	%	5.4	2.9
Effective tax rate	%	27.9	38.5
Net profit margin	%	2.6	1.1

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RCF Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 23 billion as compared to Rs 29 billion in FY17, thereby witnessing an decrease of -19.6%.
• Long-term debt stood at Rs 3 billion as compared to Rs 1 billion during FY17, a growth of 181.1%.
• Current assets fell 14% and stood at Rs 39 billion, while fixed assets rose 21% and stood at Rs 25 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 63 billion as against Rs 65 billion during FY17, thereby witnessing a fall of 3%.

RCF Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	29,250	29,297	0.2
Current Liabilities	Rs m	28,936	23,274	-19.6
Long-term Debt	Rs m	1,138	3,201	181.1
Total Liabilities	Rs m	65,358	63,236	-3.2
Current assets	Rs m	45,010	38,692	-14.0
Fixed Assets	Rs m	20,348	24,544	20.6
Total Assets	Rs m	65,358	63,236	-3.2

RCF Cash Flow Statement Analysis

• RCF's cash flow from operating activities (CFO) during FY18 stood at Rs 11 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -5 billion, an improvement of 174.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -6 billion, an improvement of 58% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -51 million from the Rs 90 million net cash flows seen during FY17.

RCF 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	15,954	10,781	-32.4%
Cash Flow from Investing Activities	Rs m	-1,803	-4,957	-
Cash Flow from Financing Activities	Rs m	-14,062	-5,875	-
Net Cash Flow	Rs m	90	-51	-

Current Valuations for RCF

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 1.4, an decline from the EPS of Rs 3.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 73.2, stands at 51.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.4 times, while the price to sales ratio stands at 0.6 times.
• The company's price to cash flow (P/CF) ratio stood at 23.4 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	126.4	131.0
TTM Earnings per share	Rs	3.2	1.4
Diluted earnings per share	Rs	3.2	1.4
Price to Cash Flow	x	14.1	23.4
TTM P/E ratio	x	24.8	51.2
Price / Book Value ratio	x	1.2	1.7
Market Cap	Rs m	34,205	50,548
Dividends per share (Unadj.)	Rs	1.1	0.6

Ratio Analysis for RCF

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.7x during FY18, from 1.6x 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 2.9x during FY18, from 3.6x 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 2.7% during FY18, from 6.1% 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 6.0% during FY18, from 11.3% 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 2.3% during FY18, from 4.2% 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	1.6	1.7
Debtors’ Days	Days	19	14
Interest coverage	x	3.6	2.9
Debt to equity ratio	x	0.0	0.1
Return on assets	%	4.2	2.3
Return on equity	%	6.1	2.7
Return on capital employed	%	11.3	6.0

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

RCF Share Price Performance

Over the last one year, RCF share price has moved down from Rs 81.8 to Rs 73.2, registering a loss of Rs 8.6 or around 10.5%.

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

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

Read: Latest Annual Report Analysis of RCF