SWARAJ ENGINES 2017-18 Annual Report Analysis

Sat, 31 Mar

SWARAJ ENGINES 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.

SWARAJ ENGINES Income Statement Analysis

• Operating income during the year rose 28.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 17.1% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 16.3% in FY18 as against 17.8% in FY17.
• Depreciation charges increased by 3.3% and finance costs increased by 6640.0% YoY, respectively.
• Other income grew by 5.8% YoY.
• Net profit for the year grew by 16.4% YoY.
• Net profit margins during the year declined from 11.8% in FY17 to 10.7% in FY18.

SWARAJ ENGINES Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	5,831	7,469	28.1%
Other income	Rs m	179	190	5.8%
Total Revenues	Rs m	6,010	7,659	27.4%
Gross profit	Rs m	1,038	1,216	17.1%
Depreciation	Rs m	163	168	3.3%
Interest	Rs m	0	10	6,640.0%
Profit before tax	Rs m	1,055	1,227	16.4%
Tax	Rs m	366	426	16.4%
Profit after tax	Rs m	688	801	16.4%
Gross profit margin	%	17.8	16.3
Effective tax rate	%	34.7	34.7
Net profit margin	%	11.8	10.7

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SWARAJ ENGINES Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 1 billion as compared to Rs 796 million in FY17, thereby witnessing an increase of 37.7%.
• Current assets fell 14% and stood at Rs 2 billion, while fixed assets rose 13% and stood at Rs 1 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 3 billion as against Rs 4 billion during FY17, thereby witnessing a fall of 7%.

SWARAJ ENGINES Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	2,830	2,280	-19.5
Current Liabilities	Rs m	796	1,096	37.7
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	3,722	3,475	-6.6
Current assets	Rs m	2,762	2,387	-13.6
Fixed Assets	Rs m	959	1,088	13.4
Total Assets	Rs m	3,722	3,475	-6.6

SWARAJ ENGINES Cash Flow Statement Analysis

• SWARAJ ENGINES's cash flow from operating activities (CFO) during FY18 stood at Rs 893 million, an improvement of 8.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 475 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 11 million from the Rs 13 million net cash flows seen during FY17.

SWARAJ ENGINES 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	823	893	8.5%
Cash Flow from Investing Activities	Rs m	-319	475	-
Cash Flow from Financing Activities	Rs m	-491	-1,357	-
Net Cash Flow	Rs m	13	11	-17.1%

Current Valuations for SWARAJ ENGINES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 66.0, an improvement from the EPS of Rs 55.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,996.6, stands at 30.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 10.6 times, while the price to sales ratio stands at 3.2 times.
• The company's price to cash flow (P/CF) ratio stood at 24.7 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	469.5	615.8
TTM Earnings per share	Rs	55.4	66.0
Diluted earnings per share	Rs	56.7	66.0
Price to Cash Flow	x	21.1	24.7
TTM P/E ratio	x	26.0	30.3
Price / Book Value ratio	x	5.1	10.5
Market Cap	Rs m	14,471	23,962
Dividends per share (Unadj.)	Rs	43.0	50.0

Ratio Analysis for SWARAJ ENGINES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.2x during FY18, from 3.5x 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 122.4x during FY18, from 7,031.8x 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 35.1% during FY18, from 24.3% 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 54.3% during FY18, from 37.3% 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 improved and stood at 23.3% during FY18, from 18.5% 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	3.5	2.2
Debtors’ Days	Days	82	75
Interest coverage	x	7,031.8	122.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.5	23.3
Return on equity	%	24.3	35.1
Return on capital employed	%	37.3	54.3

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

SWARAJ ENGINES Share Price Performance

Over the last one year, SWARAJ ENGINES share price has moved up from Rs 1,475.5 to Rs 1,996.6, registering a gain of Rs 521.2 or around 35.3%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,476.7 (down 0.1%). Over the last one year it has moved up from 16,446.0 to 18,476.7, a gain of 2,031 points (up 12.3%).

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

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

Read: Latest Annual Report Analysis of SWARAJ ENGINES