VEDANTA 2018-19 Annual Report Analysis

Sun, 31 Mar

VEDANTA 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.

VEDANTA Income Statement Analysis

• Operating income during the year rose 1.4% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 15.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 25.4% in FY19 as against 30.6% in FY18.
• Depreciation charges increased by 30.4% and finance costs increased by 11.3% YoY, respectively.
• Other income grew by 26.4% YoY.
• Net profit for the year declined by 29.2% YoY.
• Net profit margins during the year declined from 15.1% in FY18 to 10.5% in FY19.

VEDANTA Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	908,090	920,480	1.4%
Other income	Rs m	32,050	40,510	26.4%
Total Revenues	Rs m	940,140	960,990	2.2%
Gross profit	Rs m	277,590	233,900	-15.7%
Depreciation	Rs m	62,830	81,920	30.4%
Interest	Rs m	51,120	56,890	11.3%
Profit before tax	Rs m	195,690	135,600	-30.7%
Tax	Rs m	58,770	38,620	-34.3%
Profit after tax	Rs m	136,920	96,980	-29.2%
Gross profit margin	%	30.6	25.4
Effective tax rate	%	30.0	28.5
Net profit margin	%	15.1	10.5

Act Before 11:59pm: Last Day to SAVE 80% on Our Midcap Stocks Research

VEDANTA Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 766 billion as compared to Rs 672 billion in FY18, thereby witnessing an increase of 14.0%.
• Long-term debt stood at Rs 347 billion as compared to Rs 268 billion during FY18, a growth of 29.6%.
• Current assets rose 9% and stood at Rs 598 billion, while fixed assets rose 11% and stood at Rs 1,387 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 1,986 billion as against Rs 1,797 billion during FY18, thereby witnessing a growth of 11%.

VEDANTA Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	631,350	620,480	-1.7
Current Liabilities	Rs m	672,470	766,410	14.0
Long-term Debt	Rs m	267,890	347,210	29.6
Total Liabilities	Rs m	1,796,510	1,985,680	10.5
Current assets	Rs m	551,140	598,280	8.6
Fixed Assets	Rs m	1,245,370	1,387,400	11.4
Total Assets	Rs m	1,796,510	1,985,680	10.5

VEDANTA Cash Flow Statement Analysis

• VEDANTA's cash flow from operating activities (CFO) during FY19 stood at Rs 238 billion, an improvement of 36.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -105 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -102 billion, an improvement of 74% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 29 billion from the Rs -64 billion net cash flows seen during FY18.

VEDANTA 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	173,660	237,540	36.8%
Cash Flow from Investing Activities	Rs m	153,960	-105,300	-
Cash Flow from Financing Activities	Rs m	-392,550	-102,420	-
Net Cash Flow	Rs m	-64,090	29,180	-

Current Valuations for VEDANTA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 26.1, an decline from the EPS of Rs 36.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 183.8, stands at 5.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.1 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 4.8 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	244.1	247.4
TTM Earnings per share	Rs	36.8	26.1
Diluted earnings per share	Rs	36.8	26.1
Price to Cash Flow	x	5.2	4.8
TTM P/E ratio	x	7.4	5.0
Price / Book Value ratio	x	1.7	1.4
Market Cap	Rs m	1,067,082	854,484
Dividends per share (Unadj.)	Rs	21.2	18.9

Ratio Analysis for VEDANTA

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY19, from 0.8x 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 3.4x during FY19, from 4.8x 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 declined and down at 15.6% during FY19, from 21.7% 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 19.9% during FY19, from 27.4% 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 declined and down at 7.7% during FY19, from 10.5% 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	0.8	0.8
Debtors’ Days	Days	2	2
Interest coverage	x	4.8	3.4
Debt to equity ratio	x	0.4	0.6
Return on assets	%	10.5	7.7
Return on equity	%	21.7	15.6
Return on capital employed	%	27.4	19.9

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

VEDANTA Share Price Performance

Over the last one year, VEDANTA share price has moved down from Rs 278.3 to Rs 183.8, registering a loss of Rs 94.6 or around 34.0%.

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

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

Read: Latest Annual Report Analysis of VEDANTA