THERMAX LTD 2017-18 Annual Report Analysis

Sat, 31 Mar

THERMAX 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.

THERMAX Income Statement Analysis

• Operating income during the year rose 1.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 3.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 9.0% in FY18 as against 9.5% in FY17.
• Depreciation charges increased by 0.7% and finance costs increased by 32.3% YoY, respectively.
• Other income grew by 2.1% YoY.
• Net profit for the year declined by 9.0% YoY.
• Net profit margins during the year declined from 6.4% in FY17 to 5.8% in FY18.

THERMAX Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	43,764	44,441	1.5%
Other income	Rs m	1,141	1,164	2.1%
Total Revenues	Rs m	44,905	45,605	1.6%
Gross profit	Rs m	4,152	4,009	-3.4%
Depreciation	Rs m	819	824	0.7%
Interest	Rs m	97	129	32.3%
Profit before tax	Rs m	4,376	4,220	-3.6%
Tax	Rs m	1,560	1,658	6.3%
Profit after tax	Rs m	2,816	2,563	-9.0%
Gross profit margin	%	9.5	9.0
Effective tax rate	%	35.6	39.3
Net profit margin	%	6.4	5.8

Don't Miss: Best Chance to Access Midcap Stocks Research at 80% OFF

THERMAX Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 31 billion as compared to Rs 24 billion in FY17, thereby witnessing an increase of 30.2%.
• Long-term debt stood at Rs 530 million as compared to Rs 460 million during FY17, a growth of 15.2%.
• Current assets rose 24% and stood at Rs 41 billion, while fixed assets rose 5% and stood at Rs 17 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 58 billion as against Rs 49 billion during FY17, thereby witnessing a growth of 18%.

THERMAX Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	25,376	27,147	7.0
Current Liabilities	Rs m	23,652	30,787	30.2
Long-term Debt	Rs m	460	530	15.2
Total Liabilities	Rs m	49,451	58,369	18.0
Current assets	Rs m	32,974	41,016	24.4
Fixed Assets	Rs m	16,478	17,353	5.3
Total Assets	Rs m	49,451	58,369	18.0

THERMAX Cash Flow Statement Analysis

• THERMAX's cash flow from operating activities (CFO) during FY18 stood at Rs 5 billion, an improvement of 59.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -5 billion, an improvement of 608.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -203 million, an improvement of 84% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 67 million from the Rs 1 billion net cash flows seen during FY17.

THERMAX 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	3,346	5,336	59.5%
Cash Flow from Investing Activities	Rs m	-750	-5,311	-
Cash Flow from Financing Activities	Rs m	-1,256	-203	-
Net Cash Flow	Rs m	1,097	67	-93.9%

Current Valuations for THERMAX

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 22.8, an decline from the EPS of Rs 25.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,130.8, stands at 52.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.0 times, while the price to sales ratio stands at 2.9 times.
• The company's price to cash flow (P/CF) ratio stood at 36.7 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	388.6	394.6
TTM Earnings per share	Rs	25.0	22.8
Diluted earnings per share	Rs	23.6	21.5
Price to Cash Flow	x	31.7	36.7
TTM P/E ratio	x	38.5	52.6
Price / Book Value ratio	x	3.8	4.6
Market Cap	Rs m	95,466	124,442
Dividends per share (Unadj.)	Rs	6.0	6.0

Ratio Analysis for THERMAX

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY18, from 1.4x 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 33.8x during FY18, from 46.1x 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 9.4% during FY18, from 11.1% 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 15.7% during FY18, from 17.3% 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 declined and down at 4.6% during FY18, from 5.9% 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	1.4	1.3
Debtors’ Days	Days	9	10
Interest coverage	x	46.1	33.8
Debt to equity ratio	x	0.0	0.0
Return on assets	%	5.9	4.6
Return on equity	%	11.1	9.4
Return on capital employed	%	17.3	15.7

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 up from Rs 968.3 to Rs 1,130.8, registering a gain of Rs 162.5 or around 16.8%.

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 THERMAX and quarterly results for THERMAX)

Read: Latest Annual Report Analysis of THERMAX