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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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.)