TRENT 2018-19 Annual Report Analysis

Sun, 31 Mar

TRENT 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.

TRENT Income Statement Analysis

• Operating income during the year rose 21.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 12.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.1% in FY19 as against 10.9% in FY18.
• Depreciation charges increased by 13.5% and finance costs increased by 15.7% YoY, respectively.
• Other income declined by 7.7% YoY.
• Net profit for the year declined by 2.9% YoY.
• Net profit margins during the year declined from 5.6% in FY18 to 4.5% in FY19.

TRENT Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	19,683	23,910	21.5%
Other income	Rs m	442	408	-7.7%
Total Revenues	Rs m	20,125	24,318	20.8%
Gross profit	Rs m	2,144	2,416	12.7%
Depreciation	Rs m	455	517	13.5%
Interest	Rs m	438	506	15.7%
Profit before tax	Rs m	1,693	1,801	6.4%
Tax	Rs m	596	736	23.5%
Profit after tax	Rs m	1,097	1,065	-2.9%
Gross profit margin	%	10.9	10.1
Effective tax rate	%	35.2	40.9
Net profit margin	%	5.6	4.5

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TRENT Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 6 billion as compared to Rs 6 billion in FY18, thereby witnessing an decrease of -5.3%.
• Long-term debt stood at Rs 3 billion as compared to Rs 999 million during FY18, a growth of 199.9%.
• Current assets rose 39% and stood at Rs 9 billion, while fixed assets fell 1% and stood at Rs 17 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 26 billion as against Rs 23 billion during FY18, thereby witnessing a growth of 10%.

TRENT Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	15,954	16,465	3.2
Current Liabilities	Rs m	6,065	5,740	-5.3
Long-term Debt	Rs m	999	2,996	199.9
Total Liabilities	Rs m	23,359	25,588	9.5
Current assets	Rs m	6,308	8,783	39.2
Fixed Assets	Rs m	17,050	16,804	-1.4
Total Assets	Rs m	23,359	25,588	9.5

TRENT Cash Flow Statement Analysis

• TRENT's cash flow from operating activities (CFO) during FY19 stood at Rs 210 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -370 million, an improvement of 819.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 375 million, an improvement of 150% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 214 million from the Rs -15 million net cash flows seen during FY18.

TRENT 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	769	210	-72.7%
Cash Flow from Investing Activities	Rs m	-40	-370	-
Cash Flow from Financing Activities	Rs m	-743	375	-
Net Cash Flow	Rs m	-15	214	-

Current Valuations for TRENT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 3.2, an decline from the EPS of Rs 3.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 359.9, stands at 100.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.8 times, while the price to sales ratio stands at 5.0 times.
• The company's price to cash flow (P/CF) ratio stood at 72.0 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	59.2	71.9
TTM Earnings per share	Rs	3.3	3.2
Diluted earnings per share	Rs	3.1	3.0
Price to Cash Flow	x	79.3	72.0
TTM P/E ratio	x	105.4	100.3
Price / Book Value ratio	x	6.1	6.9
Market Cap	Rs m	97,402	113,802
Dividends per share (Unadj.)	Rs	1.2	1.3

Ratio Analysis for TRENT

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.5x during FY19, from 1.0x 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 4.6x during FY19, from 4.9x 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 6.5% during FY19, from 6.9% 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 11.9% during FY19, from 12.6% 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 6.1% during FY19, from 6.6% 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	1.0	1.5
Debtors’ Days	Days	0	0
Interest coverage	x	4.9	4.6
Debt to equity ratio	x	0.1	0.2
Return on assets	%	6.6	6.1
Return on equity	%	6.9	6.5
Return on capital employed	%	12.6	11.9

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

TRENT Share Price Performance

Over the last one year, TRENT share price has moved up from Rs 346.2 to Rs 359.9, registering a gain of Rs 13.7 or around 4.0%.

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

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

Read: Latest Annual Report Analysis of TRENT