M&M 2018-19 Annual Report Analysis

Sun, 31 Mar

M&M 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.

M&M Income Statement Analysis

• Operating income during the year rose 15.2% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 2.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.7% in FY19 as against 17.4% in FY18.
• Depreciation charges increased by 21.7% and finance costs increased by 25.9% YoY, respectively.
• Other income grew by 72.0% YoY.
• Net profit for the year declined by 32.1% YoY.
• Net profit margins during the year declined from 7.5% in FY18 to 4.4% in FY19.

M&M Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	909,231	1,047,207	15.2%
Other income	Rs m	6,310	10,856	72.0%
Total Revenues	Rs m	915,542	1,058,063	15.6%
Gross profit	Rs m	158,542	154,308	-2.7%
Depreciation	Rs m	32,799	39,908	21.7%
Interest	Rs m	39,871	50,214	25.9%
Profit before tax	Rs m	92,183	75,043	-18.6%
Tax	Rs m	23,677	28,540	20.5%
Profit after tax	Rs m	68,505	46,503	-32.1%
Gross profit margin	%	17.4	14.7
Effective tax rate	%	25.7	38.0
Net profit margin	%	7.5	4.4

Must See: These Segments are Witnessing Incredible Growth with Modi's Push

M&M Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 586 billion as compared to Rs 491 billion in FY18, thereby witnessing an increase of 19.2%.
• Long-term debt stood at Rs 435 billion as compared to Rs 338 billion during FY18, a growth of 28.7%.
• Current assets rose 17% and stood at Rs 694 billion, while fixed assets rose 20% and stood at Rs 925 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 1,619 billion as against Rs 1,364 billion during FY18, thereby witnessing a growth of 19%.

M&M Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	365,459	397,495	8.8
Current Liabilities	Rs m	491,495	586,093	19.2
Long-term Debt	Rs m	338,092	435,262	28.7
Total Liabilities	Rs m	1,363,693	1,618,887	18.7
Current assets	Rs m	590,760	694,060	17.5
Fixed Assets	Rs m	772,933	924,826	19.7
Total Assets	Rs m	1,363,693	1,618,887	18.7

M&M Cash Flow Statement Analysis

• M&M's cash flow from operating activities (CFO) during FY19 stood at Rs -43 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -72 billion, an improvement of 31.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 132 billion, an improvement of 109% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 17 billion from the Rs 15 billion net cash flows seen during FY18.

M&M 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	6,819	-43,473	-
Cash Flow from Investing Activities	Rs m	-54,679	-71,682	-
Cash Flow from Financing Activities	Rs m	63,145	131,936	108.9%
Net Cash Flow	Rs m	15,291	16,724	9.4%

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 42.7, an decline from the EPS of Rs 63.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 671.8, stands at 17.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.1 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 10.1 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	837.0	962.6
TTM Earnings per share	Rs	63.1	42.7
Diluted earnings per share	Rs	55.1	37.4
Price to Cash Flow	x	9.1	10.1
TTM P/E ratio	x	21.0	17.4
Price / Book Value ratio	x	3.4	2.2
Market Cap	Rs m	1,233,668	874,576
Dividends per share (Unadj.)	Rs	7.5	8.5

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.2x during FY19, from 1.2x 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 2.5x during FY19, from 3.3x 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 11.7% during FY19, from 18.7% 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 15.0% during FY19, from 18.8% 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 6.0% during FY19, from 7.9% 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	1.2	1.2
Debtors’ Days	Days	3	3
Interest coverage	x	3.3	2.5
Debt to equity ratio	x	0.9	1.1
Return on assets	%	7.9	6.0
Return on equity	%	18.7	11.7
Return on capital employed	%	18.8	15.0

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

M&M Share Price Performance

Over the last one year, M&M share price has moved down from Rs 740.2 to Rs 671.8, registering a loss of Rs 68.4 or around 9.2%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 18,824.9 (up 1.2%). Over the last one year it has moved down from 24,057.3 to 18,824.9, a loss of 5,232 points (down 21.7%).

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

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

Read: Latest Annual Report Analysis of M&M