NALCO 2022-23 Annual Report Analysis

Tue, 29 Aug

NALCO has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

NALCO Income Statement Analysis

• Operating income during the year rose 0.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 48.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 16.3% in FY23 as against 32.0% in FY22.
• Depreciation charges decreased by 14.4% and finance costs decreased by 22.3% YoY, respectively.
• Other income declined by 6.2% YoY.
• Net profit for the year declined by 51.4% YoY.
• Net profit margins during the year declined from 20.8% in FY22 to 10.1% in FY23.

NALCO Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	142,146	142,549	0.3%
Other income	Rs m	2,660	2,496	-6.2%
Total Revenues	Rs m	144,806	145,044	0.2%
Gross profit	Rs m	45,480	23,294	-48.8%
Depreciation	Rs m	8,366	7,158	-14.4%
Interest	Rs m	231	180	-22.3%
Profit before tax	Rs m	39,543	18,452	-53.3%
Tax	Rs m	10,029	4,105	-59.1%
Profit after tax	Rs m	29,514	14,347	-51.4%
Gross profit margin	%	32.0	16.3
Effective tax rate	%	25.4	22.2
Net profit margin	%	20.8	10.1

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NALCO Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 29 billion as compared to Rs 33 billion in FY22, thereby witnessing an decrease of -12.8%.
• Current assets fell 18% and stood at Rs 53 billion, while fixed assets rose 16% and stood at Rs 128 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 181 billion as against Rs 176 billion during FY22, thereby witnessing a growth of 3%.

NALCO Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	125,524	131,264	4.6
Current Liabilities	Rs m	33,102	28,857	-12.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	175,516	181,308	3.3
Current assets	Rs m	64,801	52,962	-18.3
Fixed Assets	Rs m	110,710	128,340	15.9
Total Assets	Rs m	175,516	181,308	3.3

NALCO Cash Flow Statement Analysis

• NALCO's cash flow from operating activities (CFO) during FY23 stood at Rs 9 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -9 billion, an improvement of 17% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -3 billion from the Rs 2 billion net cash flows seen during FY22.

NALCO Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	40,496	9,082	-77.6%
Cash Flow from Investing Activities	Rs m	-27,359	-3,343	-
Cash Flow from Financing Activities	Rs m	-11,144	-9,235	-
Net Cash Flow	Rs m	1,993	-3,495	-

Current Valuations for NALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 7.8, an decline from the EPS of Rs 16.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 93.0, stands at 13.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 1.2 times.
• The company's price to cash flow (P/CF) ratio stood at 8.5 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	77.4	77.6
TTM Earnings per share	Rs	16.1	7.8
Diluted earnings per share	Rs	16.1	7.8
Price to Cash Flow	x	5.9	8.5
TTM P/E ratio	x	7.6	13.0
Price / Book Value ratio	x	1.4	1.4
Market Cap	Rs m	170,623	183,158
Dividends per share (Unadj.)	Rs	6.5	4.5

Ratio Analysis for NALCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during FY23, from 2.0x during FY22. 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 103.7x during FY23, from 172.0x during FY22. 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 10.9% during FY23, from 23.5% during FY23. 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 14.2% during FY23, from 31.7% during FY22. 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 8.0% during FY23, from 16.9% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	2.0	1.8
Debtors’ Days	Days	0	0
Interest coverage	x	172.0	103.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	16.9	8.0
Return on equity	%	23.5	10.9
Return on capital employed	%	31.7	14.2

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

NALCO Share Price Performance

Over the last one year, NALCO share price has moved up from Rs 80.3 to Rs 93.0, registering a gain of Rs 12.7 or around 15.8%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 21,610.2 (up 1.2%). Over the last one year it has moved up from 18,763.6 to 21,610.2, a gain of 2,847 points (up 15.2%).

Overall, the S&P BSE SENSEX is up 10.8% over the year.

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