TATA MOTORS 2017-18 Annual Report Analysis

Sat, 31 Mar

TATA MOTORS 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.

TATA MOTORS Income Statement Analysis

• Operating income during the year rose 9.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 3.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.6% in FY18 as against 11.3% in FY17.
• Depreciation charges increased by 20.4% and finance costs increased by 10.5% YoY, respectively.
• Other income grew by 318.0% YoY.
• Net profit for the year grew by 12.4% YoY.
• Net profit margins during the year grew from 2.3% in FY17 to 2.3% in FY18.

TATA MOTORS Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	2,648,929	2,907,603	9.8%
Other income	Rs m	15,603	65,215	318.0%
Total Revenues	Rs m	2,664,532	2,972,818	11.6%
Gross profit	Rs m	298,975	308,689	3.2%
Depreciation	Rs m	179,050	215,536	20.4%
Interest	Rs m	42,380	46,818	10.5%
Profit before tax	Rs m	93,148	111,550	19.8%
Tax	Rs m	32,512	43,419	33.5%
Profit after tax	Rs m	60,636	68,131	12.4%
Gross profit margin	%	11.3	10.6
Effective tax rate	%	34.9	38.9
Net profit margin	%	2.3	2.3

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TATA MOTORS Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 1,432 billion as compared to Rs 1,156 billion in FY17, thereby witnessing an increase of 23.9%.
• Long-term debt stood at Rs 612 billion as compared to Rs 606 billion during FY17, a growth of 0.9%.
• Current assets rose 17% and stood at Rs 1,360 billion, while fixed assets rose 25% and stood at Rs 1,912 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 3,272 billion as against Rs 2,693 billion during FY17, thereby witnessing a growth of 21%.

TATA MOTORS Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	580,619	954,279	64.4
Current Liabilities	Rs m	1,156,295	1,432,195	23.9
Long-term Debt	Rs m	606,292	611,995	0.9
Total Liabilities	Rs m	2,692,970	3,271,918	21.5
Current assets	Rs m	1,161,198	1,359,728	17.1
Fixed Assets	Rs m	1,531,773	1,912,190	24.8
Total Assets	Rs m	2,692,970	3,271,918	21.5

TATA MOTORS Cash Flow Statement Analysis

• TATA MOTORS's cash flow from operating activities (CFO) during FY18 stood at Rs 239 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -262 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 20 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 7 billion from the Rs -32 billion net cash flows seen during FY17.

TATA MOTORS 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	301,993	238,574	-21.0%
Cash Flow from Investing Activities	Rs m	-380,799	-262,016	-
Cash Flow from Financing Activities	Rs m	62,053	20,117	-67.6%
Net Cash Flow	Rs m	-31,669	7,300	-

Current Valuations for TATA MOTORS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 20.1, an improvement from the EPS of Rs 17.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 327.5, stands at 15.0 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 0.4 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-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	780.0	856.2
TTM Earnings per share	Rs	17.9	20.1
Diluted earnings per share	Rs	18.3	20.5
Price to Cash Flow	x	6.5	4.8
TTM P/E ratio	x	23.0	15.0
Price / Book Value ratio	x	2.8	1.4
Market Cap	Rs m	1,629,839	1,373,622
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for TATA MOTORS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY18, from 1.0x 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 improved and stood at 3.4x during FY18, from 3.2x 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 7.1% during FY18, from 10.4% 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 10.1% during FY18, from 11.4% 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 3.5% during FY18, from 3.8% 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	1.0	0.9
Debtors’ Days	Days	2	2
Interest coverage	x	3.2	3.4
Debt to equity ratio	x	1.0	0.6
Return on assets	%	3.8	3.5
Return on equity	%	10.4	7.1
Return on capital employed	%	11.4	10.1

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

TATA MOTORS Share Price Performance

Over the last one year, TATA MOTORS share price has moved down from Rs 466.0 to Rs 327.5, registering a loss of Rs 138.5 or around 29.7%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 24,057.3 (down 0.1%). Over the last one year it has moved up from 22,012.7 to 24,057.3, a gain of 2,045 points (up 9.3%).

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

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

Read: Latest Annual Report Analysis of TATA MOTORS