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VOLTAS 2018-19 Annual Report Analysis

Thu, 18 Jul

VOLTAS 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.

VOLTAS Income Statement Analysis

• Operating income during the year rose 11.2% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 7.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.6% in FY19 as against 10.3% in FY18.
• Depreciation charges decreased by 1.5% and finance costs increased by 176.7% YoY, respectively.
• Other income grew by 7.0% YoY.
• Net profit for the year declined by 11.1% YoY.
• Net profit margins during the year declined from 8.8% in FY18 to 7.0% in FY19.

VOLTAS Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	64,044	71,241	11.2%
Other income	Rs m	1,741	1,863	7.0%
Total Revenues	Rs m	65,785	73,103	11.1%
Gross profit	Rs m	6,626	6,117	-7.7%
Depreciation	Rs m	244	240	-1.5%
Interest	Rs m	119	330	176.7%
Profit before tax	Rs m	8,005	7,410	-7.4%
Tax	Rs m	2,270	1,635	-28.0%
Profit after tax	Rs m	5,779	5,139	-11.1%
Gross profit margin	%	10.3	8.6
Effective tax rate	%	28.4	22.1
Net profit margin	%	8.8	7.0

VOLTAS Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 33 billion as compared to Rs 33 billion in FY18, thereby witnessing an increase of 0.4%.
• Current assets rose 23% and stood at Rs 56 billion, while fixed assets rose 27% and stood at Rs 3 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 75 billion as against Rs 73 billion during FY18, thereby witnessing a growth of 3%.

VOLTAS Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	39,052	41,100	5.2
Current Liabilities	Rs m	32,712	32,853	0.4
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	73,097	75,220	2.9
Current assets	Rs m	45,975	56,472	22.8
Fixed Assets	Rs m	2,193	2,775	26.5
Total Assets	Rs m	73,097	75,220	2.9

VOLTAS Cash Flow Statement Analysis

• VOLTAS's cash flow from operating activities (CFO) during FY19 stood at Rs -3 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 4 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -183 million, an improvement of 90% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 531 million from the Rs -553 million net cash flows seen during FY18.

VOLTAS 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	3,253	-3,214	-
Cash Flow from Investing Activities	Rs m	-1,992	3,927	-
Cash Flow from Financing Activities	Rs m	-1,814	-183	-
Net Cash Flow	Rs m	-553	531	-

Current Valuations for VOLTAS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.5, an decline from the EPS of Rs 17.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 587.5, stands at 34.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.6 times, while the price to sales ratio stands at 2.6 times.
• The company's price to cash flow (P/CF) ratio stood at 33.0 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	193.6	215.3
TTM Earnings per share	Rs	17.5	15.5
Diluted earnings per share	Rs	17.5	15.5
Price to Cash Flow	x	32.5	33.0
TTM P/E ratio	x	34.3	34.3
Price / Book Value ratio	x	4.6	4.6
Market Cap	Rs m	194,392	194,395
Dividends per share (Unadj.)	Rs	4.0	4.0

Ratio Analysis for VOLTAS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.7x during FY19, from 1.4x 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 23.5x during FY19, from 68.2x 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 12.5% during FY19, from 14.8% 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 17.3% during FY19, from 20.9% 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 7.3% during FY19, from 8.1% 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	1.4	1.7
Debtors’ Days	Days	89	92
Interest coverage	x	68.2	23.5
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.1	7.3
Return on equity	%	14.8	12.5
Return on capital employed	%	20.9	17.3

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

VOLTAS Share Price Performance

Over the last one year, VOLTAS share price has moved up from Rs 535.6 to Rs 587.5, registering a gain of Rs 51.9 or around 9.7%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,472.8 (down 0.3%). Over the last one year it has moved up from 17,649.2 to 18,472.8, a gain of 824 points (up 4.7%).

Overall, the S&P BSE SENSEX is up 7.2% over the year.

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