6/3/2019 L&T 2017-18 Annual Report Analysis

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L&T 2017-18 Annual Report Analysis

Mon, 13 Aug

L&T 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.

L&T Income Statement Analysis

Operating income during the year rose 9.5% on a year-on-year (YoY) basis.

The company's operating pro t increased by 21.9% YoY during the scal. Operating pro t margins witnessed a fall and down at 11.3% in FY18 as against
10.2% in FY17.

Depreciation charges and nance costs decreased by 18.6% YoY and 14.8% YoY, respectively.

Other income grew by 5.1% YoY.

Net pro t for the year grew by 23.4% YoY.

Net pro t margins during the year grew from 5.9% in FY17 to 6.6% in FY18.

L&T Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change

Net Sales Rs m 1,093,118 1,196,832 9.5%
Other income Rs m 13,441 14,120 5.1%
Total Revenues Rs m 1,106,559 1,210,952 9.4%
Gross pro t Rs m 111,316 135,714 21.9%
Depreciation Rs m 23,699 19,287 -18.6%
Interest Rs m 13,398 15,385 14.8%
Pro t before tax Rs m 87,659 115,162 31.4%
Tax Rs m 20,066 31,989 59.4%
Pro t after tax Rs m 64,855 80,044 23.4%
Gross pro t margin % 10.2 11.3
Effective tax rate % 22.9 27.8
Net pro t margin % 5.9 6.6

* Results Consolidated Source: Company Reports, Regulatory Filings, Equitymaster

Interim results exclude extraordinary / exceptional items

L&T Balance Sheet Analysis

The company's current liabilities during FY18 stood at Rs 773 billion as compared to Rs 617 billion in FY17, thereby witnessing an increase of 25.1%.

Long-term debt stood at Rs 729 billion as compared to Rs 673 billion during FY17, a growth of 8.3%.

Current assets rose 8% and stood at Rs 834 billion, while xed assets rose 7% and stood at Rs 320 billion in FY18.

Overall, the total assets and liabilities for FY18 stood at Rs 2,451 billion as against Rs 2,122 billion during FY17, thereby witnessing a growth of 15%.

L&T Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change

Networth Rs m 502,165 556,570 10.8
 
Current Liabilities Rs m 617,369 772,533 25.1
Long-term Debt Rs m 673,406 729,148 8.3
Total Liabilities Rs m 2,121,816 2,450,534 15.5
 
Current assets Rs m 769,953 833,532 8.3
Fixed Assets Rs m 299,751 320,236 6.8
Total Assets Rs m 2,121,816 2,450,534 15.5

* Results Consolidated Source: Company Reports, Regulatory Filings, Equitymaster

Interim results exclude extraordinary / exceptional items

L&T Cash Flow Statement Analysis

L&T's cash ow from operating activities (CFO) during FY18 stood at Rs -100 billion on a YoY basis.
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6/3/2019 L&T 2017-18 Annual Report Analysis
L&T's cash ow from operating activities (CFO) during FY18 stood at Rs -100 billion on a YoY basis.

Cash ow from investing activities (CFI) during FY18 stood at Rs 39 billion on a YoY basis.

Cash ow from nancial activities (CFF) during FY18 stood at Rs 94 billion, an improvement of 224% on a YoY basis.

Overall, net cash ows for the company during FY18 stood at Rs 33 billion from the Rs -2 billion net cash ows seen during FY17.

L&T Cash Flow Statement 2017-18

No. of months 12 12
Particulars % Change
Year Ending Mar-17 Mar-18
Cash Flow from Operating Activities Rs m 66,553 -100,310 -
Cash Flow from Investing Activities Rs m -97,959 39,145 -
Cash Flow from Financing Activities Rs m 28,959 93,705 223.6%
Net Cash Flow Rs m -2,448 32,539 -

* Results Consolidated Source: Company Reports, Regulatory Filings, Equitymaster

Interim results exclude extraordinary / exceptional items

Current Valuations for L&T

The trailing twelve-month earnings per share (EPS) of the company stands at Rs 57.1, an decline from the EPS of Rs 69.5 recorded last year.

The price to earnings (P/E) ratio, at the current price of Rs 1,276.5, stands at 21.1 times its trailing twelve months earnings.

The price to book value (P/BV) ratio at current price levels stands at 3.7 times, while the price to sales ratio stands at 1.7 times.

The company's price to cash ow (P/CF) ratio stood at 17.2 times its end-of-year operating cash ow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*

Sales per share (Unadj.) Rs 1,171.7 854.0
TTM Earnings per share Rs 69.5 57.1
Diluted earnings per share Rs 46.4 57.2
Price to Cash Flow x 12.9 17.2
TTM P/E ratio x 14.1 21.1
Price / Book Value ratio x 2.6 3.7
Market Cap Rs m 1,190,936 1,785,478
Dividends per share (Unadj.) Rs 21.0 16.0

* Results Consolidated Source: Company Reports, Regulatory Filings, Equitymaster

Interim results exclude extraordinary / exceptional items

Ratio Analysis for L&T

» Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.1x during FY18, from 1.2x 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 8.5x during FY18, from 7.5x 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.

» Pro tability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 14.4% during FY18, from 12.9% during FY18. The ROE measures the ability of a rm
to generate pro ts from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 9.9% during FY18, from 8.4% during FY17. The ROCE measures the
ability of a rm to generate pro ts from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 3.9% during FY18, from 3.7% during FY17. The ROA measures how e ciently 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 1.2 1.1
Debtors’ Days Days 96 106
Interest coverage x 7.5 8.5
Debt to equity ratio x 1.3 1.3
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Debt to equity ratio x 1.3 1.3
Return on assets % 3.7 3.9
Return on equity % 12.9 14.4
Return on capital employed % 8.4 9.9

* Results Consolidated Source: Company Reports, Regulatory Filings, Equitymaster

Interim results exclude extraordinary / exceptional items

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

L&T Share Price Performance

Over the last one year, L&T share price has moved up from Rs 1,132.8 to Rs 1,276.5, registering a gain of Rs 143.7 or around 12.7%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 18,112.7 (up 0.1%). Over the last one year it has moved up from 16,927.4 to 18,112.7, a gain of
1,185 points (up 7.0%).

Overall, the S&P BSE SENSEX is up 19.6% over the year.

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

Equitymaster Agora Research Private Limited

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