LUPIN LTD 2017-18 Annual Report Analysis

Sat, 31 Mar

LUPIN 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.

LUPIN Income Statement Analysis

• Operating income during the year fell 9.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 62.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.7% in FY18 as against 25.8% in FY17.
• Depreciation charges increased by 19.0% and finance costs increased by 34.0% YoY, respectively.
• Other income grew by 41.2% YoY.
• Net profit for the year declined by 90.0% YoY.
• Net profit margins during the year declined from 14.7% in FY17 to 1.6% in FY18.

LUPIN Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	173,857	157,765	-9.3%
Other income	Rs m	1,065	1,504	41.2%
Total Revenues	Rs m	174,922	159,269	-8.9%
Gross profit	Rs m	44,931	16,832	-62.5%
Depreciation	Rs m	9,122	10,859	19.0%
Interest	Rs m	1,525	2,044	34.0%
Profit before tax	Rs m	35,349	5,433	-84.6%
Tax	Rs m	9,785	2,885	-70.5%
Profit after tax	Rs m	25,564	2,548	-90.0%
Gross profit margin	%	25.8	10.7
Effective tax rate	%	27.7	53.1
Net profit margin	%	14.7	1.6

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LUPIN Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 51 billion as compared to Rs 61 billion in FY17, thereby witnessing an decrease of -16.7%.
• Long-term debt stood at Rs 64 billion as compared to Rs 56 billion during FY17, a growth of 13.8%.
• Current assets rose 2% and stood at Rs 122 billion, while fixed assets fell 5% and stood at Rs 134 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 256 billion as against Rs 261 billion during FY17, thereby witnessing a fall of 2%.

LUPIN Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	133,238	133,657	0.3
Current Liabilities	Rs m	61,206	50,956	-16.7
Long-term Debt	Rs m	56,478	64,245	13.8
Total Liabilities	Rs m	260,996	255,888	-2.0
Current assets	Rs m	119,529	122,095	2.1
Fixed Assets	Rs m	141,467	133,793	-5.4
Total Assets	Rs m	260,996	255,888	-2.0

LUPIN Cash Flow Statement Analysis

• LUPIN's cash flow from operating activities (CFO) during FY18 stood at Rs 18 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 5 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -15 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 7 billion from the Rs 20 billion net cash flows seen during FY17.

LUPIN 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	41,135	17,512	-57.4%
Cash Flow from Investing Activities	Rs m	-25,274	4,699	-
Cash Flow from Financing Activities	Rs m	4,332	-14,921	-
Net Cash Flow	Rs m	20,193	7,290	-63.9%

Current Valuations for LUPIN

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 5.6, an decline from the EPS of Rs 56.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 736.4, stands at 24.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.5 times, while the price to sales ratio stands at 2.1 times.
• The company's price to cash flow (P/CF) ratio stood at 37.0 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	385.0	349.0
TTM Earnings per share	Rs	56.6	5.6
Diluted earnings per share	Rs	56.2	5.6
Price to Cash Flow	x	18.9	37.0
TTM P/E ratio	x	25.7	24.9
Price / Book Value ratio	x	5.3	3.7
Market Cap	Rs m	707,508	495,505
Dividends per share (Unadj.)	Rs	7.5	5.0

Ratio Analysis for LUPIN

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.4x during FY18, from 2.0x 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 3.7x during FY18, from 24.2x 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 1.9% during FY18, from 19.2% 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 3.8% during FY18, from 19.4% 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 1.8% during FY18, from 10.4% 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	2.0	2.4
Debtors’ Days	Days	90	120
Interest coverage	x	24.2	3.7
Debt to equity ratio	x	0.4	0.5
Return on assets	%	10.4	1.8
Return on equity	%	19.2	1.9
Return on capital employed	%	19.4	3.8

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

LUPIN Share Price Performance

Over the last one year, LUPIN share price has moved down from Rs 1,444.8 to Rs 736.4, registering a loss of Rs 708.4 or around 49.0%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 13,157.6 (down 1.1%). Over the last one year it has moved down from 15,312.4 to 13,157.6, a loss of 2,155 points (down 14.1%).

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

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

Read: Latest Annual Report Analysis of LUPIN