CEAT. 2019-20 Annual Report Analysis

Mon, 26 Oct

CEAT. 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.

CEAT. Income Statement Analysis

• Operating income during the year fell 2.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 12.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 10.7% in FY20 as against 9.2% in FY19.
• Depreciation charges increased by 43.5% and finance costs increased by 71.4% YoY, respectively.
• Other income declined by 47.4% YoY.
• Net profit for the year declined by 8.4% YoY.
• Net profit margins during the year declined from 3.6% in FY19 to 3.4% in FY20.

CEAT. Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	69,845	67,788	-2.9%
Other income	Rs m	390	205	-47.4%
Total Revenues	Rs m	70,235	67,993	-3.2%
Gross profit	Rs m	6,425	7,238	12.7%
Depreciation	Rs m	1,927	2,765	43.5%
Interest	Rs m	880	1,509	71.4%
Profit before tax	Rs m	4,008	3,169	-20.9%
Tax	Rs m	1,251	742	-40.7%
Profit after tax	Rs m	2,511	2,301	-8.4%
Gross profit margin	%	9.2	10.7
Effective tax rate	%	31.2	23.4
Net profit margin	%	3.6	3.4

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CEAT. Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 23 billion as compared to Rs 21 billion in FY19, thereby witnessing an increase of 8.1%.
• Long-term debt stood at Rs 16 billion as compared to Rs 12 billion during FY19, a growth of 34.2%.
• Current assets fell 9% and stood at Rs 18 billion, while fixed assets rose 29% and stood at Rs 54 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 74 billion as against Rs 64 billion during FY19, thereby witnessing a growth of 15%.

CEAT. Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	27,661	29,079	5.1
Current Liabilities	Rs m	21,296	23,014	8.1
Long-term Debt	Rs m	12,226	16,408	34.2
Total Liabilities	Rs m	64,049	73,529	14.8
Current assets	Rs m	20,007	18,293	-8.6
Fixed Assets	Rs m	41,938	54,077	28.9
Total Assets	Rs m	64,049	73,529	14.8

CEAT. Cash Flow Statement Analysis

• CEAT.'s cash flow from operating activities (CFO) during FY20 stood at Rs 10 billion, an improvement of 70.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -11 billion, an improvement of 1.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs 790 million on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -402 million from the Rs -146 million net cash flows seen during FY19.

CEAT. 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	5,614	9,563	70.3%
Cash Flow from Investing Activities	Rs m	-10,605	-10,755	-
Cash Flow from Financing Activities	Rs m	4,844	790	-83.7%
Net Cash Flow	Rs m	-146	-402	-

Current Valuations for CEAT.

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 56.9, an decline from the EPS of Rs 62.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,115.2, stands at 46.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 9.2 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	1,726.7	1,675.9
TTM Earnings per share	Rs	62.1	56.9
Diluted earnings per share	Rs	62.1	56.9
Price to Cash Flow	x	10.6	9.2
TTM P/E ratio	x	46.4	46.4
Price / Book Value ratio	x	1.9	1.2
Market Cap	Rs m	45,110	45,110
Dividends per share (Unadj.)	Rs	12.0	12.0

Ratio Analysis for CEAT.

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY20, from 0.9x 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 deteriorated and stood at 3.1x during FY20, from 5.6x 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 7.9% during FY20, from 9.1% 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 10.0% during FY20, from 11.6% 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 5.2% during FY20, from 5.3% 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	0.9	0.8
Debtors’ Days	Days	37	36
Interest coverage	x	5.6	3.1
Debt to equity ratio	x	0.4	0.6
Return on assets	%	5.3	5.2
Return on equity	%	9.1	7.9
Return on capital employed	%	11.6	10.0

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

CEAT. Share Price Performance

Over the last one year, CEAT. share price has moved up from Rs 947.1 to Rs 1,115.2, registering a gain of Rs 168.2 or around 17.8%.

Overall, the S&P BSE SENSEX is up 2.6% over the year.

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