AARTI INDUSTRIES 2020-21 Annual Report Analysis

Wed, 31 Mar

AARTI INDUSTRIES has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

AARTI INDUSTRIES Income Statement Analysis

• Operating income during the year rose 6.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 0.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 24.6% in FY21 as against 26.0% in FY20.
• Depreciation charges increased by 24.9% and finance costs decreased by 30.8% YoY, respectively.
• Other income declined by 92.1% YoY.
• Net profit for the year declined by 2.1% YoY.
• Net profit margins during the year declined from 14.6% in FY20 to 13.4% in FY21.

AARTI INDUSTRIES Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	37,519	39,889	6.3%
Other income	Rs m	88	7	-92.1%
Total Revenues	Rs m	37,608	39,896	6.1%
Gross profit	Rs m	9,773	9,815	0.4%
Depreciation	Rs m	1,852	2,313	24.9%
Interest	Rs m	1,248	864	-30.8%
Profit before tax	Rs m	6,762	6,646	-1.7%
Tax	Rs m	1,294	1,293	-0.1%
Profit after tax	Rs m	5,468	5,352	-2.1%
Gross profit margin	%	26.0	24.6
Effective tax rate	%	19.1	19.5
Net profit margin	%	14.6	13.4

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AARTI INDUSTRIES Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 24 billion as compared to Rs 19 billion in FY20, thereby witnessing an increase of 25.2%.
• Long-term debt stood at Rs 13 billion as compared to Rs 6 billion during FY20, a growth of 118.3%.
• Current assets rose 18% and stood at Rs 24 billion, while fixed assets rose 22% and stood at Rs 53 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 76 billion as against Rs 63 billion during FY20, thereby witnessing a growth of 21%.

AARTI INDUSTRIES Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	29,788	35,029	17.6
Current Liabilities	Rs m	19,164	24,001	25.2
Long-term Debt	Rs m	5,808	12,681	118.3
Total Liabilities	Rs m	63,325	76,417	20.7
Current assets	Rs m	20,049	23,676	18.1
Fixed Assets	Rs m	43,276	52,741	21.9
Total Assets	Rs m	63,325	76,417	20.7

AARTI INDUSTRIES Cash Flow Statement Analysis

• AARTI INDUSTRIES's cash flow from operating activities (CFO) during FY21 stood at Rs 9 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -13 billion, an improvement of 17.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs 6 billion, an improvement of 215% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 2 billion from the Rs -6 billion net cash flows seen during FY20.

AARTI INDUSTRIES Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	11,021	8,727	-20.8%
Cash Flow from Investing Activities	Rs m	-11,241	-13,221	-
Cash Flow from Financing Activities	Rs m	-5,349	6,145	-
Net Cash Flow	Rs m	-5,569	1,650	-

Current Valuations for AARTI INDUSTRIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 30.7, an decline from the EPS of Rs 31.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,316.6, stands at 89.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 13.6 times, while the price to sales ratio stands at 5.8 times.
• The company's price to cash flow (P/CF) ratio stood at 24.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	215.3	228.9
TTM Earnings per share	Rs	31.4	30.7
Diluted earnings per share	Rs	15.1	14.8
Price to Cash Flow	x	37.7	24.6
TTM P/E ratio	x	50.5	89.2
Price / Book Value ratio	x	7.5	5.4
Market Cap	Rs m	223,112	188,896
Dividends per share (Unadj.)	Rs	3.5	3.0

Ratio Analysis for AARTI INDUSTRIES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.0x during FY21, from 1.0x during FY20. 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 8.7x during FY21, from 6.4x during FY20. 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 15.3% during FY21, from 18.4% during FY21. 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 15.7% during FY21, from 22.5% during FY20. 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 8.1% during FY21, from 10.6% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.0	1.0
Debtors’ Days	Days	7	7
Interest coverage	x	6.4	8.7
Debt to equity ratio	x	0.2	0.4
Return on assets	%	10.6	8.1
Return on equity	%	18.4	15.3
Return on capital employed	%	22.5	15.7

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

AARTI INDUSTRIES Share Price Performance

Over the last one year, AARTI INDUSTRIES share price has moved up from Rs 761.9 to Rs 1,316.6, registering a gain of Rs 554.7 or around 72.8%.

Overall, the S&P BSE SENSEX is up 74.1% over the year.

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

Read: Latest Annual Report Analysis of AARTI INDUSTRIES