TATA COMM 2017-18 Annual Report Analysis

Sat, 31 Mar

TATA COMM 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 COMM Income Statement Analysis

• Operating income during the year fell 4.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 48.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.8% in FY18 as against 7.5% in FY17.
• Depreciation charges increased by 2.2% and finance costs decreased by 6.2% YoY, respectively.
• Other income declined by 88.9% YoY.
• Net profit for the year declined by 125.1% YoY.
• Net profit margins during the year declined from 7.0% in FY17 to 1.8% in FY18.

TATA COMM Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	176,197	167,717	-4.8%
Other income	Rs m	29,223	3,249	-88.9%
Total Revenues	Rs m	205,420	170,966	-16.8%
Gross profit	Rs m	13,244	19,715	48.9%
Depreciation	Rs m	18,658	19,063	2.2%
Interest	Rs m	3,672	3,445	-6.2%
Profit before tax	Rs m	20,137	456	-97.7%
Tax	Rs m	7,833	3,549	-54.7%
Profit after tax	Rs m	12,304	-3,093	-125.1%
Gross profit margin	%	7.5	11.8
Effective tax rate	%	38.9	778.2
Net profit margin	%	7.0	-1.8

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TATA COMM Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 92 billion as compared to Rs 84 billion in FY17, thereby witnessing an increase of 10.1%.
• Long-term debt down at Rs 59 billion as compared to Rs 68 billion during FY17, a fall of 13.4%.
• Current assets fell 4% and stood at Rs 50 billion, while fixed assets fell 8% and stood at Rs 145 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 195 billion as against Rs 210 billion during FY17, thereby witnessing a fall of 7%.

TATA COMM Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	15,919	4,993	-68.6
Current Liabilities	Rs m	83,922	92,374	10.1
Long-term Debt	Rs m	68,113	58,983	-13.4
Total Liabilities	Rs m	210,333	195,095	-7.2
Current assets	Rs m	51,858	49,922	-3.7
Fixed Assets	Rs m	158,475	145,174	-8.4
Total Assets	Rs m	210,333	195,095	-7.2

TATA COMM Cash Flow Statement Analysis

• TATA COMM's cash flow from operating activities (CFO) during FY18 stood at Rs 17 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -5 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -10 billion, an improvement of 71% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 3 billion from the Rs 577 million net cash flows seen during FY17.

TATA COMM 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	23,935	17,128	-28.4%
Cash Flow from Investing Activities	Rs m	9,432	-5,037	-
Cash Flow from Financing Activities	Rs m	-32,757	-9,591	-
Net Cash Flow	Rs m	577	2,536	339.9%

Current Valuations for TATA COMM

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -10.9, an decline from the EPS of Rs 43.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 621.2, stands at -57.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 35.5 times, while the price to sales ratio stands at 1.1 times.
• The company's price to cash flow (P/CF) ratio stood at 12.0 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	618.2	588.5
TTM Earnings per share	Rs	43.2	-10.9
Diluted earnings per share	Rs	43.2	-10.9
Price to Cash Flow	x	6.6	12.0
TTM P/E ratio	x	-26.8	-57.2
Price / Book Value ratio	x	10.4	38.4
Market Cap	Rs m	164,915	191,634
Dividends per share (Unadj.)	Rs	6.0	4.5

Ratio Analysis for TATA COMM

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.5x during FY18, from 0.6x 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 1.1x during FY18, from 6.5x 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 -61.9% during FY18, from 77.3% 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 6.1% during FY18, from 28.3% 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 0.2% during FY18, from 7.6% 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	0.6	0.5
Debtors’ Days	Days	5	6
Interest coverage	x	6.5	1.1
Debt to equity ratio	x	4.3	11.8
Return on assets	%	7.6	0.2
Return on equity	%	77.3	-61.9
Return on capital employed	%	28.3	6.1

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

TATA COMM Share Price Performance

Over the last one year, TATA COMM share price has moved down from Rs 722.3 to Rs 621.2, registering a loss of Rs 101.2 or around 14.0%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 6,513.3 (down 0.7%). Over the last one year it has moved up from 5,771.5 to 6,513.3, a gain of 742 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 COMM and quarterly results for TATA COMM)

Read: Latest Annual Report Analysis of TATA COMM