THERMAX 2018-19 Annual Report Analysis

Sun, 31 Mar

THERMAX 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.

THERMAX Income Statement Analysis

• Operating income during the year rose 34.4% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 8.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 6.2% in FY19 as against 9.0% in FY18.
• Depreciation charges increased by 11.6% and finance costs increased by 11.4% YoY, respectively.
• Other income grew by 28.8% YoY.
• Net profit for the year grew by 27.4% YoY.
• Net profit margins during the year declined from 5.8% in FY18 to 5.5% in FY19.

THERMAX Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	44,441	59,741	34.4%
Other income	Rs m	1,164	1,499	28.8%
Total Revenues	Rs m	45,605	61,240	34.3%
Gross profit	Rs m	4,009	3,679	-8.2%
Depreciation	Rs m	824	920	11.6%
Interest	Rs m	129	143	11.4%
Profit before tax	Rs m	4,220	4,114	-2.5%
Tax	Rs m	1,658	849	-48.8%
Profit after tax	Rs m	2,563	3,265	27.4%
Gross profit margin	%	9.0	6.2
Effective tax rate	%	39.3	20.6
Net profit margin	%	5.8	5.5

THERMAX Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 37 billion as compared to Rs 31 billion in FY18, thereby witnessing an increase of 18.7%.
• Long-term debt down at Rs 351 million as compared to Rs 530 million during FY18, a fall of 33.8%.
• Current assets rose 15% and stood at Rs 47 billion, while fixed assets rose 6% and stood at Rs 18 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 66 billion as against Rs 58 billion during FY18, thereby witnessing a growth of 13%.

THERMAX Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	27,147	30,143	11.0
Current Liabilities	Rs m	30,787	36,538	18.7
Long-term Debt	Rs m	530	351	-33.8
Total Liabilities	Rs m	58,369	65,780	12.7
Current assets	Rs m	41,016	47,371	15.5
Fixed Assets	Rs m	17,353	18,409	6.1
Total Assets	Rs m	58,369	65,780	12.7

THERMAX Cash Flow Statement Analysis

• THERMAX's cash flow from operating activities (CFO) during FY19 stood at Rs -1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -654 million on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 852 million from the Rs 67 million net cash flows seen during FY18.

THERMAX 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	5,336	-1,154	-
Cash Flow from Investing Activities	Rs m	-5,311	2,655	-
Cash Flow from Financing Activities	Rs m	-203	-654	-
Net Cash Flow	Rs m	67	852	1,167.7%

Current Valuations for THERMAX

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 29.0, an improvement from the EPS of Rs 22.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 972.3, stands at 35.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 28.0 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	394.6	530.5
TTM Earnings per share	Rs	22.8	29.0
Diluted earnings per share	Rs	21.5	27.4
Price to Cash Flow	x	39.8	28.0
TTM P/E ratio	x	52.6	35.5
Price / Book Value ratio	x	4.6	3.9
Market Cap	Rs m	124,442	117,286
Dividends per share (Unadj.)	Rs	6.0	7.0

Ratio Analysis for THERMAX

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY19, from 1.3x 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 29.7x during FY19, from 33.8x 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 improved and stood at 10.8% during FY19, from 9.4% 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 14.0% during FY19, from 15.7% 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 improved and stood at 5.2% during FY19, from 4.6% 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	1.3	1.3
Debtors’ Days	Days	10	8
Interest coverage	x	33.8	29.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	4.6	5.2
Return on equity	%	9.4	10.8
Return on capital employed	%	15.7	14.0

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

THERMAX Share Price Performance

Over the last one year, THERMAX share price has moved down from Rs 1,130.8 to Rs 972.3, registering a loss of Rs 158.5 or around 14.0%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,472.0 (up 0.5%). Over the last one year it has moved down from 18,476.7 to 18,472.0, a loss of 5 points (down 0.0%).

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

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

Read: Latest Annual Report Analysis of THERMAX