CEAT LTD. 2017-18 Annual Report Analysis

Tue, 21 Aug

CEAT LTD. 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.

CEAT LTD. Income Statement Analysis

• Operating income during the year rose 8.1% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 6.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 9.9% in FY18 as against 11.4% in FY17.
• Depreciation charges and finance costs increased by 17.8% YoY and 19.1% YoY, respectively.
• Other income grew by 58.1% YoY.
• Net profit for the year declined by 35.1% YoY.
• Net profit margins during the year declined from 6.2% in FY17 to 3.7% in FY18.

CEAT LTD. Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	57,665	62,308	8.1%
Other income	Rs m	186	295	58.1%
Total Revenues	Rs m	57,851	62,602	8.2%
Gross profit	Rs m	6,568	6,148	-6.4%
Depreciation	Rs m	1,431	1,686	17.8%
Interest	Rs m	817	974	19.1%
Profit before tax	Rs m	4,506	3,783	-16.1%
Tax	Rs m	1,064	1,340	25.9%
Profit after tax	Rs m	3,592	2,333	-35.1%
Gross profit margin	%	11.4	9.9
Effective tax rate	%	23.6	35.4
Net profit margin	%	6.2	3.7

CEAT LTD. Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 18 billion as compared to Rs 14 billion in FY17, thereby witnessing an increase of 30.7%.
• Long-term debt down at Rs 5 billion as compared to Rs 9 billion during FY17, a fall of 47.1%.
• Current assets fell 1% and stood at Rs 18 billion, while fixed assets rose 9% and stood at Rs 30 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 52 billion as against Rs 49 billion during FY17, thereby witnessing a growth of 5%.

CEAT LTD. Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	24,150	26,061	7.9
Current Liabilities	Rs m	14,079	18,400	30.7
Long-term Debt	Rs m	8,524	4,512	-47.1
Total Liabilities	Rs m	49,169	51,610	5.0
Current assets	Rs m	18,420	18,146	-1.5
Fixed Assets	Rs m	27,788	30,338	9.2
Total Assets	Rs m	49,169	51,610	5.0

CEAT LTD. Cash Flow Statement Analysis

• CEAT LTD.'s cash flow from operating activities (CFO) during FY18 stood at Rs 7 billion, an improvement of 101.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -4 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -2 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 582 million from the Rs 104 million net cash flows seen during FY17.

CEAT LTD. 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	3,347	6,757	101.9%
Cash Flow from Investing Activities	Rs m	-5,434	-4,151	-
Cash Flow from Financing Activities	Rs m	2,191	-2,025	-
Net Cash Flow	Rs m	104	582	462.0%

Current Valuations for CEAT LTD.

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 57.7, an decline from the EPS of Rs 88.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,415.8, stands at 19.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.6 times, while the price to sales ratio stands at 1.1 times.
• The company's price to cash flow (P/CF) ratio stood at 15.1 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	1,425.6	1,540.4
TTM Earnings per share	Rs	88.8	57.7
Diluted earnings per share	Rs	88.8	57.7
Price to Cash Flow	x	12.1	15.1
TTM P/E ratio	x	19.6	19.6
Price / Book Value ratio	x	1.8	2.6
Market Cap	Rs m	57,267	57,267
Dividends per share (Unadj.)	Rs	11.5	11.5

Ratio Analysis for CEAT LTD.

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x during FY18, from 1.3x 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 4.9x 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 9.0% during FY18, from 14.9% 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 15.2% during FY18, from 16.8% 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 6.4% during FY18, from 9.0% 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	1.3	1.0
Debtors’ Days	Days	39	44
Interest coverage	x	6.5	4.9
Debt to equity ratio	x	0.4	0.2
Return on assets	%	9.0	6.4
Return on equity	%	14.9	9.0
Return on capital employed	%	16.8	15.2

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

CEAT LTD. Share Price Performance

Over the last one year, CEAT LTD. share price has moved up from Rs 1,675.6 to Rs 1,415.8, registering a loss of Rs 259.8 or around 15.5%.

Overall, the S&P BSE SENSEX is up 22.5% over the year.

(To know more, check out historical annual results for CEAT LTD. and quarterly results for CEAT LTD.)