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L&T 2017-18 Annual Report Analysis
Sat, 31 Mar

L&T 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.

L&T Income Statement Analysis

  • Operating income during the year rose 10.0% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 0.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.0% in FY18 as against 15.5% in FY17.
  • Depreciation charges decreased by 18.6% and finance costs increased by 12.8% YoY, respectively.
  • Other income grew by 222.1% YoY.
  • Net profit for the year grew by 22.7% YoY.
  • Net profit margins during the year grew from 6.3% in FY17 to 7.1% in FY18.

L&T Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 1,086,126 1,195,042 10.0%
Other income Rs m 14,922 48,065 222.1%
Total Revenues Rs m 1,101,048 1,243,108 12.9%
Gross profit Rs m 167,824 166,781 -0.6%
Depreciation Rs m 23,699 19,287 -18.6%
Interest Rs m 70,172 79,168 12.8%
Profit before tax Rs m 88,874 116,392 31.0%
Tax Rs m 20,066 31,989 59.4%
Profit after tax Rs m 68,808 84,403 22.7%
Gross profit margin % 15.5 14.0
Effective tax rate % 22.6 27.5
Net profit margin % 6.3 7.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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L&T Balance Sheet Analysis

  • The company's current liabilities during FY18 stood at Rs 1,093 billion as compared to Rs 895 billion in FY17, thereby witnessing an increase of 22.1%.
  • Long-term debt stood at Rs 729 billion as compared to Rs 673 billion during FY17, a growth of 8.3%.
  • Current assets rose 16% and stood at Rs 1,416 billion, while fixed assets rose 12% and stood at Rs 995 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 2,411 billion as against Rs 2,104 billion during FY17, thereby witnessing a growth of 15%.

L&T Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 499,133 545,864 9.4
 
Current Liabilities Rs m 895,251 1,092,744 22.1
Long-term Debt Rs m 673,406 729,148 8.3
Total Liabilities Rs m 2,104,455 2,411,225 14.6
 
Current assets Rs m 1,218,413 1,416,305 16.2
Fixed Assets Rs m 886,042 994,921 12.3
Total Assets Rs m 2,104,455 2,411,225 14.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



L&T Cash Flow Statement Analysis

  • L&T's cash flow from operating activities (CFO) during FY18 stood at Rs -100 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY18 stood at Rs 39 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY18 stood at Rs 94 billion, an improvement of 224% on a YoY basis.
  • Overall, net cash flows for the company during FY18 stood at Rs 33 billion from the Rs -2 billion net cash flows seen during FY17.

L&T 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 66,553 -100,310 -
Cash Flow from Investing Activities Rs m -97,959 39,145 -
Cash Flow from Financing Activities Rs m 28,959 93,705 223.6%
Net Cash Flow Rs m -2,448 32,539 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for L&T

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 60.2, an decline from the EPS of Rs 73.8 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,311.9, stands at 22.2 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 1.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 19.9 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 1,164.2 852.8
TTM Earnings per share Rs 73.8 60.2
Diluted earnings per share Rs 49.0 60.1
Price to Cash Flow x 24.0 19.9
TTM P/E ratio x 36.3 22.2
Price / Book Value ratio x 2.6 3.8
Market Cap Rs m 1,292,158 2,066,039
Dividends per share (Unadj.) Rs 21.0 16.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for L&T

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY18, from 1.4x 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 improved and stood at 2.5x during FY18, from 2.3x 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 improved and stood at 15.5% during FY18, from 13.8% 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 improved and stood at 15.3% during FY18, from 13.6% 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 improved and stood at 6.8% during FY18, from 6.6% 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 1.4 1.3
Debtors’ Days Days 10 10
Interest coverage x 2.3 2.5
Debt to equity ratio x 1.3 1.3
Return on assets % 6.6 6.8
Return on equity % 13.8 15.5
Return on capital employed % 13.6 15.3
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



To see how L&T has performed over the last 5 years, please visit here.

L&T Share Price Performance

Over the last one year, L&T share price has moved down from Rs 1,577.6 to Rs 1,311.9, registering a loss of Rs 265.7 or around 16.8%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,476.7 (down 0.1%). Over the last one year it has moved up from 16,446.0 to 18,476.7, a gain of 2,031 points (up 12.3%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for L&T and quarterly results for L&T)

Annual Report FAQs

What is the current share price of L&T?

L&T currently trades at Rs 3,774.1 per share. You can check out the latest share price performance of L&T here...

What was the revenue of L&T in FY18? How does it compare to earlier years?

The revenues of L&T stood at Rs 1,243,108 m in FY18, which was up 12.9% compared to Rs 1,101,048 m reported in FY17.

L&T's revenue has grown from Rs 854,082 m in FY14 to Rs 1,243,108 m in FY18.

Over the past 5 years, the revenue of L&T has grown at a CAGR of 9.8%.

What was the net profit of L&T in FY18? How does it compare to earlier years?

The net profit of L&T stood at Rs 84,403 m in FY18, which was up 22.7% compared to Rs 68,808 m reported in FY17.

This compares to a net profit of Rs 55,827 m in FY16 and a net profit of Rs 50,562 m in FY15.

Over the past 5 years, L&T net profit has grown at a CAGR of 14.7%.

What does the cash flow statement of L&T reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of L&T reveals:

  • Cash flow from operations decreased in FY18 and stood at Rs -100,310 m as compared to Rs 66,553 m in FY17.
  • Cash flow from investments increased in FY18 and stood at Rs 39,145 m as compared to Rs -97,959 m in FY17.
  • Cash flow from financial activity increased in FY18 and stood at Rs 93,705 m as compared to Rs 28,959 m in FY17.

Here's the cash flow statement of L&T for the past 5 years.

(Rs m)FY14FY15FY16FY17FY18
From Operations-71,42831,180-32,39666,553-100,310
From Investments-55,099-18,841-46,266-97,95939,145
From Financial Activity131,356-14,36672,52728,95993,705
Net Cashflow4,830-2,027-6,135-2,44832,539

What does the Key Ratio analysis of L&T reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of L&T reveals:

  • Operating profit margins witnessed a fall and stood at 14.0% in FY18 as against 15.5% in FY17.
  • Net profit margins grew from 6.3% in FY17 to 7.1% in FY18.
  • Debt to Equity ratio for FY18 stood at 1.3 as compared to 1.3 in FY17.

Here's the ratio/financial analysis of L&T for the past 5 years.

 FY14FY15FY16FY17FY18
Operating Profit Margin (%)17.012.215.715.514.0
Net Profit Margin (%)5.89.05.66.37.1
Debt to Equity Ratio (x)1.60.21.41.31.3

Read: Latest Annual Report Analysis of L&T

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