TATA STEEL 2018-19 Annual Report Analysis

Sun, 31 Mar

TATA STEEL 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.

TATA STEEL Income Statement Analysis

• Operating income during the year rose 36.7% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 4.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 17.6% in FY19 as against 25.2% in FY18.
• Depreciation charges increased by 32.0% and finance costs increased by 41.9% YoY, respectively.
• Other income grew by 40.8% YoY.
• Net profit for the year declined by 48.8% YoY.
• Net profit margins during the year declined from 14.2% in FY18 to 5.3% in FY19.

TATA STEEL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	1,223,885	1,673,017	36.7%
Other income	Rs m	10,107	14,233	40.8%
Total Revenues	Rs m	1,233,991	1,687,250	36.7%
Gross profit	Rs m	309,028	294,828	-4.6%
Depreciation	Rs m	57,417	75,793	32.0%
Interest	Rs m	54,547	77,419	41.9%
Profit before tax	Rs m	207,170	155,849	-24.8%
Tax	Rs m	33,923	67,088	97.8%
Profit after tax	Rs m	173,246	88,761	-48.8%
Gross profit margin	%	25.2	17.6
Effective tax rate	%	16.4	43.0
Net profit margin	%	14.2	5.3

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TATA STEEL Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 610 billion as compared to Rs 557 billion in FY18, thereby witnessing an increase of 9.7%.
• Long-term debt stood at Rs 803 billion as compared to Rs 728 billion during FY18, a growth of 10.4%.
• Current assets fell 13% and stood at Rs 590 billion, while fixed assets rose 23% and stood at Rs 1,738 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 2,328 billion as against Rs 2,087 billion during FY18, thereby witnessing a growth of 12%.

TATA STEEL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	608,706	689,251	13.2
Current Liabilities	Rs m	556,614	610,341	9.7
Long-term Debt	Rs m	727,891	803,427	10.4
Total Liabilities	Rs m	2,087,221	2,327,734	11.5
Current assets	Rs m	678,772	589,910	-13.1
Fixed Assets	Rs m	1,408,450	1,737,825	23.4
Total Assets	Rs m	2,087,221	2,327,734	11.5

TATA STEEL Cash Flow Statement Analysis

• TATA STEEL's cash flow from operating activities (CFO) during FY19 stood at Rs 253 billion, an improvement of 215.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -292 billion, an improvement of 142.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -45 billion from the Rs 29 billion net cash flows seen during FY18.

TATA STEEL 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	80,234	253,360	215.8%
Cash Flow from Investing Activities	Rs m	-120,256	-292,109	-
Cash Flow from Financing Activities	Rs m	66,399	-6,727	-
Net Cash Flow	Rs m	29,330	-45,132	-

Current Valuations for TATA STEEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 73.8, an decline from the EPS of Rs 144.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 520.9, stands at 7.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.4 times.
• The company's price to cash flow (P/CF) ratio stood at 4.0 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	1,017.4	1,390.8
TTM Earnings per share	Rs	144.0	73.8
Diluted earnings per share	Rs	141.7	72.6
Price to Cash Flow	x	3.0	4.0
TTM P/E ratio	x	4.1	7.1
Price / Book Value ratio	x	1.2	1.0
Market Cap	Rs m	730,913	654,883
Dividends per share (Unadj.)	Rs	10.0	13.0

Ratio Analysis for TATA STEEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.0x 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 3.0x during FY19, from 4.8x 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 12.9% during FY19, from 28.5% 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 15.6% during FY19, from 19.6% 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 7.1% during FY19, from 10.9% 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	1.0
Debtors’ Days	Days	4	3
Interest coverage	x	4.8	3.0
Debt to equity ratio	x	1.2	1.2
Return on assets	%	10.9	7.1
Return on equity	%	28.5	12.9
Return on capital employed	%	19.6	15.6

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

TATA STEEL Share Price Performance

Over the last one year, TATA STEEL share price has moved down from Rs 570.9 to Rs 520.9, registering a loss of Rs 50.1 or around 8.8%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 11,355.1 (up 2.3%). Over the last one year it has moved down from 13,322.0 to 11,355.1, a loss of 1,967 points (down 14.8%).

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

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

Read: Latest Annual Report Analysis of TATA STEEL