TATA STEEL 2018-19 Annual Report Analysis

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TATA STEEL 2018-19 Annual Report Analysis
Mon, 9 Sep

TATA STEEL 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.

TATA STEEL Income Statement Analysis

  • Operating income during the year rose 27.0% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 37.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 18.9% in FY19 as against 17.5% in FY18.
  • Depreciation charges increased by 27.9% and finance costs increased by 40.4% YoY, respectively.
  • Other income grew by 61.2% YoY.
  • Net profit for the year declined by 46.1% YoY.
  • Net profit margins during the year declined from 14.2% in FY18 to 6.0% in FY19.

TATA STEEL Income Statement 2018-19

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Net Sales Rs m 1,241,097 1,576,690 27.0%
Other income Rs m 8,811 14,206 61.2%
Total Revenues Rs m 1,249,908 1,590,896 27.3%
Gross profit Rs m 216,723 297,880 37.4%
Depreciation Rs m 57,417 73,418 27.9%
Interest Rs m 54,547 76,601 40.4%
Profit before tax Rs m 113,570 162,067 42.7%
Tax Rs m 33,923 67,184 98.0%
Profit after tax Rs m 178,029 95,920 -46.1%
Gross profit margin % 17.5 18.9
Effective tax rate % 29.9 41.5
Net profit margin % 14.2 6.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



TATA STEEL Balance Sheet Analysis

  • The company's current liabilities during FY19 stood at Rs 596 billion as compared to Rs 557 billion in FY18, thereby witnessing an increase of 7.1%.
  • Long-term debt down at Rs 108 billion as compared to Rs 159 billion during FY18, a fall of 32.0%.
  • Current assets fell 19% and stood at Rs 548 billion, while fixed assets rose 29% and stood at Rs 1,450 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 2,336 billion as against Rs 2,098 billion during FY18, thereby witnessing a growth of 11%.

TATA STEEL Balance Sheet as on March 2019

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Networth Rs m 585,956 666,501 13.7
 
Current Liabilities Rs m 556,613 596,080 7.1
Long-term Debt Rs m 158,850 108,021 -32.0
Total Liabilities Rs m 2,097,579 2,335,824 11.4
 
Current assets Rs m 677,747 548,487 -19.1
Fixed Assets Rs m 1,127,193 1,450,061 28.6
Total Assets Rs m 2,097,579 2,335,824 11.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



TATA STEEL Cash Flow Statement Analysis

  • TATA STEEL's cash flow from operating activities (CFO) during FY19 stood at Rs 253 billion, an improvement of 215.8% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY19 stood at Rs -299 billion, an improvement of 148.7% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY19 stood at Rs -7 billion on a YoY basis.
  • Overall, net cash flows for the company during FY19 stood at Rs -52 billion from the Rs 29 billion net cash flows seen during FY18.

TATA STEEL 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 80,234 253,360 215.8%
Cash Flow from Investing Activities Rs m -120,256 -299,018 -
Cash Flow from Financing Activities Rs m 66,399 -6,727 -
Net Cash Flow Rs m 29,330 -52,041 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for TATA STEEL

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.4, an decline from the EPS of Rs 15.5 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 358.6, stands at 4.5 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 9.4 times, while the price to sales ratio stands at 4.0 times.
  • The company's price to cash flow (P/CF) ratio stood at 2.1 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 108.3 137.6
TTM Earnings per share Rs 15.5 8.4
Diluted earnings per share Rs 183.3 98.8
Price to Cash Flow x 17.6 2.1
TTM P/E ratio x 53.5 4.5
Price / Book Value ratio x 11.9 9.4
Market Cap Rs m 4,109,413 348,231
Dividends per share (Unadj.) Rs 10.0 13.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for TATA STEEL

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY19, from 1.2x 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 improved and stood at 3.1x during FY19, from 3.1x 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 14.4% during FY19, from 30.4% 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 30.9% during FY19, from 35.8% 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 7.4% during FY19, from 11.1% 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 1.2 0.9
Debtors’ Days Days 37 27
Interest coverage x 3.1 3.1
Debt to equity ratio x 0.3 0.2
Return on assets % 11.1 7.4
Return on equity % 30.4 14.4
Return on capital employed % 35.8 30.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

TATA STEEL Share Price Performance

Over the last one year, TATA STEEL share price has moved down from Rs 619.0 to Rs 358.6, registering a loss of Rs 260.5 or around 42.1%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 8,828.5 (up 0.8%). Over the last one year it has moved down from 14,045.5 to 8,828.5, a loss of 5,217 points (down 37.1%).

Overall, the S&P BSE SENSEX is down 2.7% over the year.

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

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