HONEYWELL AUTOMATION 2017-18 Annual Report Analysis

Sat, 31 Mar

HONEYWELL AUTOMATION 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.

HONEYWELL AUTOMATION Income Statement Analysis

• Operating income during the year rose 12.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 28.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 13.7% in FY18 as against 12.0% in FY17.
• Depreciation charges decreased by 7.0% and finance costs increased by 38.2% YoY, respectively.
• Other income declined by 18.5% YoY.
• Net profit for the year grew by 47.4% YoY.
• Net profit margins during the year grew from 7.1% in FY17 to 9.3% in FY18.

HONEYWELL AUTOMATION Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	23,754	26,818	12.9%
Other income	Rs m	415	338	-18.5%
Total Revenues	Rs m	24,169	27,157	12.4%
Gross profit	Rs m	2,849	3,664	28.6%
Depreciation	Rs m	164	152	-7.0%
Interest	Rs m	28	38	38.2%
Profit before tax	Rs m	3,073	3,812	24.1%
Tax	Rs m	1,379	1,315	-4.6%
Profit after tax	Rs m	1,695	2,497	47.4%
Gross profit margin	%	12.0	13.7
Effective tax rate	%	44.9	34.5
Net profit margin	%	7.1	9.3

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HONEYWELL AUTOMATION Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 10 billion as compared to Rs 8 billion in FY17, thereby witnessing an increase of 31.9%.
• Current assets rose 26% and stood at Rs 21 billion, while fixed assets rose 22% and stood at Rs 10 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 31 billion as against Rs 25 billion during FY17, thereby witnessing a growth of 25%.

HONEYWELL AUTOMATION Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	11,775	14,148	20.2
Current Liabilities	Rs m	7,578	9,992	31.9
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	24,826	30,935	24.6
Current assets	Rs m	16,463	20,715	25.8
Fixed Assets	Rs m	8,363	10,221	22.2
Total Assets	Rs m	24,826	30,935	24.6

HONEYWELL AUTOMATION Cash Flow Statement Analysis

• HONEYWELL AUTOMATION's cash flow from operating activities (CFO) during FY18 stood at Rs 3 billion, an improvement of 22.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -2 billion, an improvement of 105.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -106 million, an improvement of 0% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 800 million from the Rs 1 billion net cash flows seen during FY17.

HONEYWELL AUTOMATION 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	2,152	2,629	22.2%
Cash Flow from Investing Activities	Rs m	-846	-1,742	-
Cash Flow from Financing Activities	Rs m	-106	-106	-
Net Cash Flow	Rs m	1,195	800	-33.1%

Current Valuations for HONEYWELL AUTOMATION

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 282.5, an improvement from the EPS of Rs 191.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 16,861.9, stands at 59.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 10.5 times, while the price to sales ratio stands at 5.6 times.
• The company's price to cash flow (P/CF) ratio stood at 53.6 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	2,687.1	3,033.7
TTM Earnings per share	Rs	191.7	282.5
Diluted earnings per share	Rs	191.7	282.5
Price to Cash Flow	x	49.0	53.6
TTM P/E ratio	x	53.7	59.7
Price / Book Value ratio	x	7.0	10.0
Market Cap	Rs m	81,956	141,950
Dividends per share (Unadj.)	Rs	10.0	32.0

Ratio Analysis for HONEYWELL AUTOMATION

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.1x during FY18, from 2.2x 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 101.3x during FY18, from 112.7x 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 improved and stood at 17.7% during FY18, from 14.4% 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 improved and stood at 27.2% during FY18, from 26.3% 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 improved and stood at 8.2% during FY18, from 6.9% 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	2.2	2.1
Debtors’ Days	Days	769	805
Interest coverage	x	112.7	101.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	6.9	8.2
Return on equity	%	14.4	17.7
Return on capital employed	%	26.3	27.2

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

HONEYWELL AUTOMATION Share Price Performance

Over the last one year, HONEYWELL AUTOMATION share price has moved up from Rs 10,300.3 to Rs 16,861.9, registering a gain of Rs 6,561.6 or around 63.7%.

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 HONEYWELL AUTOMATION and quarterly results for HONEYWELL AUTOMATION)

Read: Latest Annual Report Analysis of HONEYWELL AUTOMATION