TATA STEEL LONG PROD 2017-18 Annual Report Analysis

Sat, 31 Mar

TATA STEEL LONG PROD 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.

TATA STEEL LONG PROD Income Statement Analysis

• Operating income during the year rose 56.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 196.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.3% in FY18 as against 12.3% in FY17.
• Depreciation charges decreased by 3.6% and finance costs increased by 32.9% YoY, respectively.
• Other income grew by 16.2% YoY.
• Net profit for the year grew by 139.7% YoY.
• Net profit margins during the year grew from 11.8% in FY17 to 18.0% in FY18.

TATA STEEL LONG PROD Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	4,995	7,837	56.9%
Other income	Rs m	371	431	16.2%
Total Revenues	Rs m	5,365	8,268	54.1%
Gross profit	Rs m	616	1,827	196.4%
Depreciation	Rs m	128	123	-3.6%
Interest	Rs m	24	32	32.9%
Profit before tax	Rs m	835	2,102	151.7%
Tax	Rs m	247	693	180.3%
Profit after tax	Rs m	588	1,409	139.7%
Gross profit margin	%	12.3	23.3
Effective tax rate	%	29.6	33.0
Net profit margin	%	11.8	18.0

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TATA STEEL LONG PROD Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 4 billion as compared to Rs 1 billion in FY17, thereby witnessing an increase of 150.9%.
• Current assets rose 34% and stood at Rs 9 billion, while fixed assets rose 102% and stood at Rs 8 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 17 billion as against Rs 10 billion during FY17, thereby witnessing a growth of 58%.

TATA STEEL LONG PROD Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	8,649	9,865	14.1
Current Liabilities	Rs m	1,491	3,741	150.9
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	10,459	16,533	58.1
Current assets	Rs m	6,715	8,965	33.5
Fixed Assets	Rs m	3,744	7,568	102.2
Total Assets	Rs m	10,459	16,533	58.1

TATA STEEL LONG PROD Cash Flow Statement Analysis

• TATA STEEL LONG PROD's cash flow from operating activities (CFO) during FY18 stood at Rs 411 million, an improvement of 89.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -202 million on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -2 billion from the Rs 546 million net cash flows seen during FY17.

TATA STEEL LONG PROD 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	217	411	89.7%
Cash Flow from Investing Activities	Rs m	514	-2,131	-
Cash Flow from Financing Activities	Rs m	-185	-202	-
Net Cash Flow	Rs m	546	-1,922	-

Current Valuations for TATA STEEL LONG PROD

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 91.5, an improvement from the EPS of Rs 38.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 923.7, stands at 29.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.2 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 9.8 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	324.3	508.9
TTM Earnings per share	Rs	38.2	91.5
Diluted earnings per share	Rs	13.0	31.2
Price to Cash Flow	x	44.1	9.8
TTM P/E ratio	x	53.6	29.6
Price / Book Value ratio	x	1.1	1.5
Market Cap	Rs m	9,151	14,944
Dividends per share (Unadj.)	Rs	11.0	20.0

Ratio Analysis for TATA STEEL LONG PROD

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY18, from 4.5x 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 improved and stood at 65.7x during FY18, from 35.2x 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 14.3% during FY18, from 6.8% 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 21.6% during FY18, from 9.9% 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 8.7% 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	4.5	2.4
Debtors’ Days	Days	261	274
Interest coverage	x	35.2	65.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	5.9	8.7
Return on equity	%	6.8	14.3
Return on capital employed	%	9.9	21.6

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

TATA STEEL LONG PROD Share Price Performance

Over the last one year, TATA STEEL LONG PROD share price has moved up from Rs 699.2 to Rs 923.7, registering a gain of Rs 224.5 or around 32.1%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 13,322.0 (down 2.0%). Over the last one year it has moved up from 11,804.5 to 13,322.0, a gain of 1,518 points (up 12.9%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of TATA STEEL LONG PROD