EMCO 2017-18 Annual Report Analysis

Sat, 31 Mar

EMCO 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.

EMCO Income Statement Analysis

• Operating income during the year fell 52.4% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 266.9% YoY during the fiscal. Operating profit margins witnessed a growth and stood at 19.9% in FY18 as against 5.7% in FY17.
• Depreciation charges decreased by 7.4% and finance costs increased by 10.5% YoY, respectively.
• Other income grew by 165.2% YoY.
• Net profit for the year grew by 88.7% YoY.
• Net profit margins during the year declined from 9.6% in FY17 to 38.0% in FY18.

EMCO Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	8,153	3,877	-52.4%
Other income	Rs m	150	397	165.2%
Total Revenues	Rs m	8,303	4,275	-48.5%
Gross profit	Rs m	462	-772	-266.9%
Depreciation	Rs m	181	167	-7.4%
Interest	Rs m	1,500	1,658	10.5%
Profit before tax	Rs m	-1,069	-2,200	105.7%
Tax	Rs m	-289	-727	151.7%
Profit after tax	Rs m	-780	-1,473	88.7%
Gross profit margin	%	5.7	-19.9
Effective tax rate	%	27.0	33.0
Net profit margin	%	-9.6	-38.0

Don't Miss: Key Information for Long-term Investors

EMCO Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 14 billion as compared to Rs 12 billion in FY17, thereby witnessing an increase of 13.6%.
• Long-term debt down at Rs 227 million as compared to Rs 1 billion during FY17, a fall of 77.8%.
• Current assets fell 9% and stood at Rs 11 billion, while fixed assets fell 6% and stood at Rs 3 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 14 billion as against Rs 15 billion during FY17, thereby witnessing a fall of 8%.

EMCO Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	2,695	1,266	-53.0
Current Liabilities	Rs m	12,086	13,727	13.6
Long-term Debt	Rs m	1,021	227	-77.8
Total Liabilities	Rs m	15,486	14,175	-8.5
Current assets	Rs m	11,951	10,856	-9.2
Fixed Assets	Rs m	3,535	3,318	-6.1
Total Assets	Rs m	15,486	14,175	-8.5

EMCO Cash Flow Statement Analysis

• EMCO's cash flow from operating activities (CFO) during FY18 stood at Rs 803 million, an improvement of 707.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 466 million, an improvement of 90.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -156 million from the Rs 85 million net cash flows seen during FY17.

EMCO 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	100	803	707.1%
Cash Flow from Investing Activities	Rs m	245	466	90.1%
Cash Flow from Financing Activities	Rs m	-133	-1,385	-
Net Cash Flow	Rs m	85	-156	-

Current Valuations for EMCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -21.7, an decline from the EPS of Rs -11.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 10.3, stands at -0.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.6 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at -1.1 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	120.3	57.1
TTM Earnings per share	Rs	-11.5	-21.7
Diluted earnings per share	Rs	-11.5	-21.7
Price to Cash Flow	x	-3.2	-1.1
TTM P/E ratio	x	-2.7	-0.5
Price / Book Value ratio	x	0.8	1.2
Market Cap	Rs m	2,067	1,460
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for EMCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY18, from 1.0x 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 deteriorated and stood at -0.3x during FY18, from 0.3x 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 declined and down at -116.4% during FY18, from -29.0% 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 declined and down at -36.3% during FY18, from 11.6% 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 declined and down at 1.3% during FY18, from 4.6% 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	1.0	0.8
Debtors’ Days	Days	2,852	5,392
Interest coverage	x	0.3	-0.3
Debt to equity ratio	x	0.4	0.2
Return on assets	%	4.6	1.3
Return on equity	%	-29.0	-116.4
Return on capital employed	%	11.6	-36.3

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

EMCO Share Price Performance

Over the last one year, EMCO share price has moved down from Rs 27.9 to Rs 10.3, registering a loss of Rs 17.6 or around 63.1%.

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 0.0 to 18,476.7, a gain of 18,477 points (up 0.0%).

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

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