GRASIM 2018-19 Annual Report Analysis

Tue, 30 Jul

GRASIM has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

GRASIM Income Statement Analysis

• Operating income during the year rose 30.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 19.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 16.5% in FY19 as against 17.9% in FY18.
• Depreciation charges increased by 19.7% and finance costs increased by 30.5% YoY, respectively.
• Other income declined by 6.9% YoY.
• Net profit for the year declined by 24.7% YoY.
• Net profit margins during the year declined from 6.5% in FY18 to 3.8% in FY19.

GRASIM Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	558,935	729,706	30.6%
Other income	Rs m	8,607	8,014	-6.9%
Total Revenues	Rs m	567,542	737,720	30.0%
Gross profit	Rs m	100,227	120,185	19.9%
Depreciation	Rs m	27,244	32,605	19.7%
Interest	Rs m	13,640	17,806	30.5%
Profit before tax	Rs m	67,950	77,788	14.5%
Tax	Rs m	19,471	24,574	26.2%
Profit after tax	Rs m	36,876	27,760	-24.7%
Gross profit margin	%	17.9	16.5
Effective tax rate	%	28.7	31.6
Net profit margin	%	6.5	3.8

GRASIM Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 461 billion as compared to Rs 423 billion in FY18, thereby witnessing an increase of 9.0%.
• Long-term debt stood at Rs 556 billion as compared to Rs 408 billion during FY18, a growth of 36.3%.
• Current assets rose 21% and stood at Rs 487 billion, while fixed assets rose 10% and stood at Rs 524 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 2,292 billion as against Rs 2,079 billion during FY18, thereby witnessing a growth of 10%.

GRASIM Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	573,619	557,732	-2.8
Current Liabilities	Rs m	422,919	461,189	9.0
Long-term Debt	Rs m	407,934	555,869	36.3
Total Liabilities	Rs m	2,079,201	2,292,027	10.2
Current assets	Rs m	403,092	487,118	20.8
Fixed Assets	Rs m	476,909	523,516	9.8
Total Assets	Rs m	2,079,201	2,292,027	10.2

GRASIM Cash Flow Statement Analysis

• GRASIM's cash flow from operating activities (CFO) during FY19 stood at Rs -25 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -22 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 49 billion, an improvement of 41% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 3 billion from the Rs 9 billion net cash flows seen during FY18.

GRASIM Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	-41,399	-24,548	-
Cash Flow from Investing Activities	Rs m	5,098	-21,870	-
Cash Flow from Financing Activities	Rs m	34,491	48,702	41.2%
Net Cash Flow	Rs m	8,555	2,746	-67.9%

Current Valuations for GRASIM

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 42.2, an decline from the EPS of Rs 56.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 793.8, stands at 14.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.1 times, while the price to sales ratio stands at 0.8 times.
• The company's price to cash flow (P/CF) ratio stood at 6.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	850.3	1,109.7
TTM Earnings per share	Rs	56.1	42.2
Diluted earnings per share	Rs	79.0	59.5
Price to Cash Flow	x	7.3	6.2
TTM P/E ratio	x	21.0	14.9
Price / Book Value ratio	x	1.3	1.1
Market Cap	Rs m	521,820	370,530
Dividends per share (Unadj.)	Rs	6.2	7.0

Ratio Analysis for GRASIM

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.1x during FY19, from 1.0x during FY18. 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 5.4x during FY19, from 6.0x during FY18. 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 5.0% during FY19, from 6.4% during FY19. 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 6.3% during FY19, from 7.1% during FY18. 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 2.0% during FY19, from 2.4% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	1.0	1.1
Debtors’ Days	Days	34	32
Interest coverage	x	6.0	5.4
Debt to equity ratio	x	0.7	1.0
Return on assets	%	2.4	2.0
Return on equity	%	6.4	5.0
Return on capital employed	%	7.1	6.3

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

GRASIM Share Price Performance

Over the last one year, GRASIM share price has moved down from Rs 1,021.3 to Rs 793.8, registering a loss of Rs 227.5 or around 22.3%.

Overall, the S&P BSE SENSEX is up 0.9% over the year.

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