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AARTI INDUSTRIES 2022-23 Annual Report Analysis

Mon, 17 Jul

AARTI INDUSTRIES 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.

AARTI INDUSTRIES Income Statement Analysis

• Operating income during the year rose 12.4% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 36.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 18.3% in FY23 as against 32.5% in FY22.
• Depreciation charges increased by 26.0% and finance costs increased by 64.4% YoY, respectively.
• Other income grew by 11.7% YoY.
• Net profit for the year declined by 54.0% YoY.
• Net profit margins during the year declined from 22.4% in FY22 to 9.2% in FY23.

AARTI INDUSTRIES Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	53,000	59,545	12.4%
Other income	Rs m	8	9	11.7%
Total Revenues	Rs m	53,007	59,554	12.4%
Gross profit	Rs m	17,201	10,890	-36.7%
Depreciation	Rs m	2,464	3,105	26.0%
Interest	Rs m	1,023	1,683	64.4%
Profit before tax	Rs m	13,722	6,111	-55.5%
Tax	Rs m	1,863	659	-64.6%
Profit after tax	Rs m	11,859	5,452	-54.0%
Gross profit margin	%	32.5	18.3
Effective tax rate	%	13.6	10.8
Net profit margin	%	22.4	9.2

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AARTI INDUSTRIES Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 28 billion as compared to Rs 22 billion in FY22, thereby witnessing an increase of 28.5%.
• Long-term debt down at Rs 6 billion as compared to Rs 9 billion during FY22, a fall of 31.7%.
• Current assets fell 9% and stood at Rs 25 billion, while fixed assets rose 18% and stood at Rs 61 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 85 billion as against Rs 78 billion during FY22, thereby witnessing a growth of 9%.

AARTI INDUSTRIES Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	45,160	49,201	8.9
Current Liabilities	Rs m	21,657	27,833	28.5
Long-term Debt	Rs m	9,299	6,347	-31.7
Total Liabilities	Rs m	78,230	85,281	9.0
Current assets	Rs m	26,988	24,593	-8.9
Fixed Assets	Rs m	51,241	60,688	18.4
Total Assets	Rs m	78,230	85,281	9.0

AARTI INDUSTRIES Cash Flow Statement Analysis

• AARTI INDUSTRIES's cash flow from operating activities (CFO) during FY23 stood at Rs 13 billion, an improvement of 152.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -13 billion, an improvement of 13.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 472 million on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 272 million from the Rs -2 billion net cash flows seen during FY22.

AARTI INDUSTRIES 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	5,187	13,098	152.5%
Cash Flow from Investing Activities	Rs m	-11,694	-13,298	-
Cash Flow from Financing Activities	Rs m	4,120	472	-88.6%
Net Cash Flow	Rs m	-2,388	272	-

Current Valuations for AARTI INDUSTRIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.0, an decline from the EPS of Rs 32.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 464.8, stands at 28.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.4 times, while the price to sales ratio stands at 2.8 times.
• The company's price to cash flow (P/CF) ratio stood at 31.2 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	146.2	164.3
TTM Earnings per share	Rs	32.7	15.0
Diluted earnings per share	Rs	32.7	15.0
Price to Cash Flow	x	24.2	31.2
TTM P/E ratio	x	29.2	28.1
Price / Book Value ratio	x	7.3	5.4
Market Cap	Rs m	331,052	266,866
Dividends per share (Unadj.)	Rs	3.5	2.5

Ratio Analysis for AARTI INDUSTRIES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY23, from 1.2x 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 4.6x during FY23, from 14.4x 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 11.1% during FY23, from 26.3% 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 14.0% during FY23, from 27.1% 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 8.4% during FY23, from 16.5% 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	1.2	0.9
Debtors’ Days	Days	8	6
Interest coverage	x	14.4	4.6
Debt to equity ratio	x	0.2	0.1
Return on assets	%	16.5	8.4
Return on equity	%	26.3	11.1
Return on capital employed	%	27.1	14.0

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 down from Rs 728.7 to Rs 464.8, registering a loss of Rs 263.9 or around 36.2%.

Overall, the S&P BSE SENSEX is up 24.4% over the year.

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