ALKEM LABORATORIES 2021-22 Annual Report Analysis

Thu, 14 Jul

ALKEM LABORATORIES has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

ALKEM LABORATORIES Income Statement Analysis

• Operating income during the year rose 20.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 4.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 19.2% in FY22 as against 21.9% in FY21.
• Depreciation charges increased by 10.7% and finance costs decreased by 11.1% YoY, respectively.
• Other income declined by 30.3% YoY.
• Net profit for the year grew by 3.9% YoY.
• Net profit margins during the year declined from 18.2% in FY21 to 15.8% in FY22.

ALKEM LABORATORIES Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	88,650	106,342	20.0%
Other income	Rs m	2,332	1,627	-30.3%
Total Revenues	Rs m	90,982	107,968	18.7%
Gross profit	Rs m	19,424	20,380	4.9%
Depreciation	Rs m	2,746	3,040	10.7%
Interest	Rs m	589	524	-11.1%
Profit before tax	Rs m	18,421	18,443	0.1%
Tax	Rs m	2,243	1,640	-26.9%
Profit after tax	Rs m	16,178	16,803	3.9%
Gross profit margin	%	21.9	19.2
Effective tax rate	%	12.2	8.9
Net profit margin	%	18.2	15.8

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ALKEM LABORATORIES Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 48 billion as compared to Rs 36 billion in FY21, thereby witnessing an increase of 33.3%.
• Long-term debt down at Rs 94 million as compared to Rs 279 million during FY21, a fall of 66.4%.
• Current assets rose 22% and stood at Rs 84 billion, while fixed assets rose 24% and stood at Rs 43 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 128 billion as against Rs 104 billion during FY21, thereby witnessing a growth of 23%.

ALKEM LABORATORIES Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	73,756	86,373	17.1
Current Liabilities	Rs m	36,041	48,053	33.3
Long-term Debt	Rs m	279	94	-66.4
Total Liabilities	Rs m	104,114	127,599	22.6
Current assets	Rs m	69,288	84,354	21.7
Fixed Assets	Rs m	34,825	43,245	24.2
Total Assets	Rs m	104,114	127,599	22.6

ALKEM LABORATORIES Cash Flow Statement Analysis

• ALKEM LABORATORIES's cash flow from operating activities (CFO) during FY22 stood at Rs 11 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -14 billion, an improvement of 43.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs 4 billion, an improvement of 240% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 580 million from the Rs -17 million net cash flows seen during FY21.

ALKEM LABORATORIES Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	12,649	11,110	-12.2%
Cash Flow from Investing Activities	Rs m	-9,985	-14,351	-
Cash Flow from Financing Activities	Rs m	-2,718	3,796	-
Net Cash Flow	Rs m	-17	580	-

Current Valuations for ALKEM LABORATORIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 140.5, an improvement from the EPS of Rs 135.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 3,181.1, stands at 22.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.4 times, while the price to sales ratio stands at 3.6 times.
• The company's price to cash flow (P/CF) ratio stood at 20.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	741.4	889.4
TTM Earnings per share	Rs	135.3	140.5
Diluted earnings per share	Rs	135.3	140.5
Price to Cash Flow	x	17.5	20.3
TTM P/E ratio	x	20.5	22.6
Price / Book Value ratio	x	4.4	4.7
Market Cap	Rs m	321,244	402,868
Dividends per share (Unadj.)	Rs	30.0	34.0

Ratio Analysis for ALKEM LABORATORIES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during FY22, from 1.9x during FY21. 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 improved and stood at 36.2x during FY22, from 32.3x during FY21. 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 19.5% during FY22, from 21.9% during FY22. 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 21.9% during FY22, from 25.7% during FY21. 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 13.6% during FY22, from 16.1% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	1.9	1.8
Debtors’ Days	Days	66	65
Interest coverage	x	32.3	36.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	16.1	13.6
Return on equity	%	21.9	19.5
Return on capital employed	%	25.7	21.9

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

ALKEM LABORATORIES Share Price Performance

Over the last one year, ALKEM LABORATORIES share price has moved down from Rs 3,315.6 to Rs 3,181.1, registering a loss of Rs 134.5 or around 4.1%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 22,545.8 (up 0.7%). Over the last one year it has moved down from 26,059.1 to 22,545.8, a loss of 3,513 points (down 13.5%).

Overall, the S&P BSE SENSEX is up 2.0% over the year.

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

Read: Latest Annual Report Analysis of ALKEM LABORATORIES