ARMAN FINANCIAL 2022-23 Annual Report Analysis

Tue, 3 Oct

ARMAN FINANCIAL has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

ARMAN FINANCIAL Income Statement Analysis

• Interest income during the year rose 80.4% on a year-on-year (YoY) basis.
• Interest expenses were up by 91.7% YoY during the same period.
• Operating expenses increased by 26.7% YoY during the year.
• The company's net interest income (NII) increased by 73.4% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 1291.9% in FY23 as against 2453.2% in FY22.
• Other income declined by 99.2% YoY during the year.
• Net profit for the year increased by 195.7% YoY.
• Net profit margins during the year increased to 22.1% in FY23 from 13.5% in FY22.

ARMAN FINANCIAL Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	2,350	4,239	80.4%
Other Income	Rs m	4	0	-99.2%
Interest Expense	Rs m	899	1,723	91.7%
Net Interest Income	Rs m	1,452	2,516	73.4%
Operating Expense	Rs m	991	1,255	26.7%
Pre-provision Operating Profit	Rs m	465	1,261	171.4%
Provisions & Contingencies	Rs m	3,077	4,905	59.4%
Profit before tax	Rs m	455	1,250	174.5%
Tax	Rs m	138	311	125.7%
Profit after tax	Rs m	317	938	195.7%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	2453.2	1291.9
Net profit margin	%	13.5	22.1

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ARMAN FINANCIAL Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 0 m as compared to Rs 0 m in FY22, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY22, a rise of 0.0%.
• Cost of deposits for ARMAN FINANCIAL rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 195 m during the year from Rs 59 m in FY22.
• Borrowing stood at Rs 1.8 bn, a growth of 1029.2% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 20.7 bn as against Rs 12.5 bn during FY22, thereby witnessing a rise of 65.0%.

ARMAN FINANCIAL Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	2,126	3,655	71.9%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	59	195	229.2%
Borrowings	Rs m	156	1,757	1029.2%
Total Assets	Rs m	12,529	20,671	65.0%

Current Valuations for ARMAN FINANCIAL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 110.5, an improvement from the EPS of Rs 37.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,173.6, stands at 11.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 5.1 times, while the price to income ratio stands at 2.6 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	276.8	499.3
Earnings per share (Unadj.)	Rs	37.4	110.5
Diluted earnings per share	Rs	37.3	110.4
Avg P/E ratio	Rs	22.1	11.8
Avg P/ABV ratio	Rs	5.4	5.1
Avg Market Cap	Rs	7,003	11,039
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for ARMAN FINANCIAL

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY23, from 0.0x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.48x during FY23, from 0.07x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): ARMAN FINANCIAL's capital adequacy ratio (CAR) was at 32.6% as on 31 March 2023 as compared to 29.0% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 25.7% during FY23, from 14.9% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 4.54% during FY23, from 2.53% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 18.74% during FY23, from 12.83% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. ARMAN FINANCIAL's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of ARMAN FINANCIAL was 0.0% in financial year 2023. This compared with 0.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.1	0.5
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	29.0	32.6
Return on Equity	%	14.9	25.7
Return on Assets	%	2.5	4.5
Return on Capital Employed	%	12.8	18.7
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.0	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

ARMAN FINANCIAL Share Price Performance

Over the last one year, ARMAN FINANCIAL share price has moved up from Rs 1,352.3 to Rs 2,173.6, registering a gain of Rs 821.3 or around 60.7%.

Overall, the S&P BSE SENSEX is up 15.7% over the year.

(To know more, you can check out historical annual results for ARMAN FINANCIAL here and quarterly results for ARMAN FINANCIAL here)