TATA CHEMICALS 2019-20 Annual Report Analysis

Tue, 31 Mar

TATA CHEMICALS has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

TATA CHEMICALS Income Statement Analysis

• Operating income during the year fell 19.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 276.2% YoY during the fiscal. Operating profit margins witnessed a fall and down at 78.0% in FY20 as against 16.8% in FY19.
• Depreciation charges increased by 16.6% and finance costs decreased by 7.8% YoY, respectively.
• Other income declined by 27.1% YoY.
• Net profit for the year grew by 459.2% YoY.
• Net profit margins during the year grew from 10.1% in FY19 to 69.5% in FY20.

TATA CHEMICALS Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	128,107	103,568	-19.2%
Other income	Rs m	4,265	3,111	-27.1%
Total Revenues	Rs m	132,372	106,679	-19.4%
Gross profit	Rs m	21,469	80,773	276.2%
Depreciation	Rs m	5,714	6,665	16.6%
Interest	Rs m	3,708	3,419	-7.8%
Profit before tax	Rs m	16,312	73,800	352.4%
Tax	Rs m	3,436	1,793	-47.8%
Profit after tax	Rs m	12,876	72,007	459.2%
Gross profit margin	%	16.8	78.0
Effective tax rate	%	21.1	2.4
Net profit margin	%	10.1	69.5

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TATA CHEMICALS Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 70 billion as compared to Rs 39 billion in FY19, thereby witnessing an increase of 77.9%.
• Long-term debt down at Rs 35 billion as compared to Rs 48 billion during FY19, a fall of 27.2%.
• Current assets fell 4% and stood at Rs 78 billion, while fixed assets rose 6% and stood at Rs 199 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 277 billion as against Rs 269 billion during FY19, thereby witnessing a growth of 3%.

TATA CHEMICALS Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	123,413	128,977	4.5
Current Liabilities	Rs m	39,486	70,249	77.9
Long-term Debt	Rs m	47,693	34,734	-27.2
Total Liabilities	Rs m	268,687	276,734	3.0
Current assets	Rs m	80,983	77,989	-3.7
Fixed Assets	Rs m	187,704	198,746	5.9
Total Assets	Rs m	268,687	276,734	3.0

TATA CHEMICALS Cash Flow Statement Analysis

• TATA CHEMICALS's cash flow from operating activities (CFO) during FY20 stood at Rs 18 billion, an improvement of 12.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -24 billion, an improvement of 20.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -1 billion, an improvement of 92% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -6 billion from the Rs -21 billion net cash flows seen during FY19.

TATA CHEMICALS Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	15,813	17,801	12.6%
Cash Flow from Investing Activities	Rs m	-19,582	-23,682	-
Cash Flow from Financing Activities	Rs m	-17,118	-1,293	-
Net Cash Flow	Rs m	-20,576	-6,341	-

Current Valuations for TATA CHEMICALS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 282.6, an improvement from the EPS of Rs 50.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 223.0, stands at 5.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.4 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 1.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	502.9	406.5
TTM Earnings per share	Rs	50.5	282.6
Diluted earnings per share	Rs	50.5	282.6
Price to Cash Flow	x	8.1	1.6
TTM P/E ratio	x	11.6	5.5
Price / Book Value ratio	x	1.4	1.0
Market Cap	Rs m	170,305	124,410
Dividends per share (Unadj.)	Rs	12.5	11.0

Ratio Analysis for TATA CHEMICALS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.1x during FY20, from 2.1x during FY19. 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 22.6x during FY20, from 5.4x during FY19. 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 55.8% during FY20, from 10.4% during FY20. 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 47.2% during FY20, from 11.7% during FY19. 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 27.3% during FY20, from 6.2% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	2.1	1.1
Debtors’ Days	Days	4	6
Interest coverage	x	5.4	22.6
Debt to equity ratio	x	0.4	0.3
Return on assets	%	6.2	27.3
Return on equity	%	10.4	55.8
Return on capital employed	%	11.7	47.2

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

TATA CHEMICALS Share Price Performance

Over the last one year, TATA CHEMICALS share price has moved down from Rs 587.5 to Rs 223.0, registering a loss of Rs 364.5 or around 62.0%.

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Read: Latest Annual Report Analysis of TATA CHEMICALS