ITC 2018-19 Annual Report Analysis

Sun, 31 Mar

ITC 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.

ITC Income Statement Analysis

• Operating income during the year rose 19.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 8.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 39.3% in FY19 as against 43.1% in FY18.
• Depreciation charges increased by 13.0% and finance costs decreased by 37.9% YoY, respectively.
• Other income grew by 18.7% YoY.
• Net profit for the year grew by 11.7% YoY.
• Net profit margins during the year declined from 29.3% in FY18 to 27.4% in FY19.

ITC Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	392,093	468,433	19.5%
Other income	Rs m	18,367	21,807	18.7%
Total Revenues	Rs m	410,460	490,240	19.4%
Gross profit	Rs m	169,161	184,254	8.9%
Depreciation	Rs m	12,363	13,966	13.0%
Interest	Rs m	1,150	714	-37.9%
Profit before tax	Rs m	174,015	191,381	10.0%
Tax	Rs m	59,164	63,139	6.7%
Profit after tax	Rs m	114,851	128,242	11.7%
Gross profit margin	%	43.1	39.3
Effective tax rate	%	34.0	33.0
Net profit margin	%	29.3	27.4

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ITC Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 100 billion as compared to Rs 93 billion in FY18, thereby witnessing an increase of 8.2%.
• Long-term debt down at Rs 82 million as compared to Rs 115 million during FY18, a fall of 29.1%.
• Current assets rose 20% and stood at Rs 317 billion, while fixed assets rose 6% and stood at Rs 400 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 717 billion as against Rs 642 billion during FY18, thereby witnessing a growth of 12%.

ITC Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	506,361	571,429	12.9
Current Liabilities	Rs m	92,502	100,120	8.2
Long-term Debt	Rs m	115	82	-29.1
Total Liabilities	Rs m	642,409	717,390	11.7
Current assets	Rs m	263,936	317,473	20.3
Fixed Assets	Rs m	378,473	399,918	5.7
Total Assets	Rs m	642,409	717,390	11.7

ITC Cash Flow Statement Analysis

• ITC's cash flow from operating activities (CFO) during FY19 stood at Rs 126 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -55 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -69 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 2 billion from the Rs -2 billion net cash flows seen during FY18.

ITC 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	131,694	125,834	-4.4%
Cash Flow from Investing Activities	Rs m	-71,139	-55,457	-
Cash Flow from Financing Activities	Rs m	-62,211	-68,686	-
Net Cash Flow	Rs m	-1,656	1,691	-

Current Valuations for ITC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.5, an improvement from the EPS of Rs 9.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 296.7, stands at 29.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.4 times, while the price to sales ratio stands at 7.8 times.
• The company's price to cash flow (P/CF) ratio stood at 24.9 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	32.1	38.2
TTM Earnings per share	Rs	9.4	10.5
Diluted earnings per share	Rs	9.3	10.4
Price to Cash Flow	x	24.8	24.9
TTM P/E ratio	x	28.1	29.3
Price / Book Value ratio	x	7.3	6.2
Market Cap	Rs m	3,683,256	3,543,970
Dividends per share (Unadj.)	Rs	5.2	5.8

Ratio Analysis for ITC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.2x during FY19, from 2.9x 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 improved and stood at 269.0x during FY19, from 152.3x 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 22.4% during FY19, from 22.7% 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 33.6% during FY19, from 34.6% 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 18.0% during FY19, from 18.1% 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	2.9	3.2
Debtors’ Days	Days	2	3
Interest coverage	x	152.3	269.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.1	18.0
Return on equity	%	22.7	22.4
Return on capital employed	%	34.6	33.6

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

ITC Share Price Performance

Over the last one year, ITC share price has moved up from Rs 255.9 to Rs 296.7, registering a gain of Rs 40.8 or around 15.9%.

Overall, the S&P BSE SENSEX is up 16.3% over the year.

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

Read: Latest Annual Report Analysis of ITC