VOLTAS 2019-20 Annual Report Analysis

Tue, 31 Mar

VOLTAS 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.

VOLTAS Income Statement Analysis

• Operating income during the year rose 7.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 8.3% in FY20 as against 8.3% in FY19.
• Depreciation charges increased by 33.3% and finance costs decreased by 36.0% YoY, respectively.
• Other income declined by 18.0% YoY.
• Net profit for the year declined by 7.9% YoY.
• Net profit margins during the year declined from 7.9% in FY19 to 6.8% in FY20.

VOLTAS Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	71,241	76,581	7.5%
Other income	Rs m	1,974	1,619	-18.0%
Total Revenues	Rs m	73,215	78,200	6.8%
Gross profit	Rs m	5,888	6,355	7.9%
Depreciation	Rs m	240	320	33.3%
Interest	Rs m	330	211	-36.0%
Profit before tax	Rs m	7,292	7,443	2.1%
Tax	Rs m	1,635	2,233	36.5%
Profit after tax	Rs m	5,657	5,211	-7.9%
Gross profit margin	%	8.3	8.3
Effective tax rate	%	22.4	30.0
Net profit margin	%	7.9	6.8

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VOLTAS Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 37 billion as compared to Rs 33 billion in FY19, thereby witnessing an increase of 13.0%.
• Long-term debt stood at Rs 54 million as compared to Rs 0 million during FY19, a fall of 0.0%.
• Current assets fell 1% and stood at Rs 56 billion, while fixed assets rose 42% and stood at Rs 25 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 81 billion as against Rs 74 billion during FY19, thereby witnessing a growth of 9%.

VOLTAS Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	41,100	42,802	4.1
Current Liabilities	Rs m	32,853	37,138	13.0
Long-term Debt	Rs m	0	54	0.0
Total Liabilities	Rs m	74,161	80,832	9.0
Current assets	Rs m	56,472	55,784	-1.2
Fixed Assets	Rs m	17,689	25,048	41.6
Total Assets	Rs m	74,161	80,832	9.0

VOLTAS Cash Flow Statement Analysis

• VOLTAS's cash flow from operating activities (CFO) during FY20 stood at Rs 5 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -417 million from the Rs 531 million net cash flows seen during FY19.

VOLTAS 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	-3,214	4,625	-
Cash Flow from Investing Activities	Rs m	3,927	-2,105	-
Cash Flow from Financing Activities	Rs m	-183	-2,937	-
Net Cash Flow	Rs m	531	-417	-

Current Valuations for VOLTAS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.7, an decline from the EPS of Rs 17.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 478.9, stands at 26.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.7 times, while the price to sales ratio stands at 2.1 times.
• The company's price to cash flow (P/CF) ratio stood at 35.6 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	215.3	231.4
TTM Earnings per share	Rs	17.1	15.7
Diluted earnings per share	Rs	17.1	15.7
Price to Cash Flow	x	35.4	35.6
TTM P/E ratio	x	36.8	26.9
Price / Book Value ratio	x	4.6	4.6
Market Cap	Rs m	187,876	196,827
Dividends per share (Unadj.)	Rs	4.0	4.0

Ratio Analysis for VOLTAS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.5x during FY20, from 1.7x 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 36.3x during FY20, from 23.1x 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 declined and down at 12.2% during FY20, from 13.8% 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 declined and down at 17.9% during FY20, from 18.5% 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 declined and down at 6.7% during FY20, from 8.1% 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	1.7	1.5
Debtors’ Days	Days	9	9
Interest coverage	x	23.1	36.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.1	6.7
Return on equity	%	13.8	12.2
Return on capital employed	%	18.5	17.9

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

VOLTAS Share Price Performance

Over the last one year, VOLTAS share price has moved down from Rs 630.5 to Rs 478.9, registering a loss of Rs 151.6 or around 24.0%.

Meanwhile, the S&P BSE CONSUMER DURABLES Index is trading at Rs 19,363.0 (up 1.6%). Over the last one year it has moved down from 23,856.7 to 19,363.0, a loss of 4,494 points (down 18.8%).

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

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

Read: Latest Annual Report Analysis of VOLTAS