NESTLE INDIA

Submitted by: GARIMA BHATT

Ratio Analysis for NESTLE

1. Profitability Ratio
 Return on Equity (ROE): The ROE for the company improved and stood at 35.8% during
CY17, from 30.5% during CY17. 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 improved and stood at
55.9% during CY17, from 49.4% during CY16. 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 improved and stood at 17.9% during
CY17, from 16.0% during CY16. The ROA measures how efficiently the company uses its
assets to generate earnings.

2. Solvency Ratio
 Current Ratio: The company's current ratio improved and stood at 2.6x during CY17,
from 2.4x during CY16. 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 21.0x during CY17, from 18.1x during CY16. 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.

3. Valuation
 The trailing twelve-month earnings per share (EPS) of the company stands at Rs 127.1,
an improvement from the EPS of Rs 103.9 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 10,297.5, stands at 67.4 times
its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 19.5 times, while
the price to sales ratio stands at 6.6 times.
 The company's price to cash flow (P/CF) ratio stood at 63.3 times its end-of-year
operating cash flow earnings.
4. Shareholding Pattern
 The company's current liabilities during CY17 stood at Rs 15 billion as compared to Rs 14
billion in CY16, thereby witnessing an increase of 9.2%.
 Long-term debt stood at Rs 351 million as compared to Rs 332 million during CY16, a
growth of 6.0%.
 Current assets rose 20% and stood at Rs 39 billion, while fixed assets fell 7% and stood
at Rs 27 billion in CY17.
 Overall, the total assets and liabilities for CY17 stood at Rs 74 billion as against Rs 68
billion during CY16, thereby witnessing a growth of 8%.

5. Growth of PAT
 Operating income during the year rose 9.5% on a year-on-year (YoY) basis.
 The company's operating profit increased by 13.3% YoY during the fiscal. Operating
profit margins witnessed a rise and up at 20.9% in CY17 as against 20.2% in CY16.
 Depreciation charges decreased by 3.2% and finance costs increased by 1.1% YoY,
respectively.
 Other income grew by 17.2% YoY.
 Net profit for the year grew by 22.4% YoY.
 Net profit margins during the year grew from 10.8% in CY16 to 12.0% in CY17.

6. Cash flow Analysis

 NESTLE's cash flow from operating activities (CFO) during CY17 stood at Rs 18 billion, an
improvement of 24.0% on a YoY basis.
 Cash flow from investing activities (CFI) during CY17 stood at Rs -1 billion, an
improvement of 3.7% on a YoY basis.
 Cash flow from financial activities (CFF) during CY17 stood at Rs -10 billion on a YoY
basis.
 Overall, net cash flows for the company during CY17 stood at Rs 7 billion from the Rs 7
billion net cash flows seen during CY16.