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AKME STAR 2022-23 Annual Report Analysis

Tue, 7 Nov

AKME STAR 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.

AKME STAR Income Statement Analysis

• Interest income during the year rose 88.7% on a year-on-year (YoY) basis.
• Interest expenses were up by 84.6% YoY during the same period.
• Operating expenses increased by 50.7% YoY during the year.
• The company's net interest income (NII) increased by 90.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 10.1% in FY23 as against 10.9% in FY22.
• Other income increased by 198.4% YoY during the year.
• Net profit for the year increased by 1022.2% YoY.
• Net profit margins during the year increased to 19.8% in FY23 from 3.3% in FY22.

AKME STAR Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	187	353	88.7%
Other Income	Rs m	6	19	198.4%
Interest Expense	Rs m	62	114	84.6%
Net Interest Income	Rs m	126	239	90.7%
Operating Expense	Rs m	116	175	50.7%
Pre-provision Operating Profit	Rs m	16	84	425.9%
Provisions & Contingencies	Rs m	38	15	-60.2%
Profit before tax	Rs m	13	80	507.7%
Tax	Rs m	7	10	48.6%
Profit after tax	Rs m	6	70	1022.2%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	10.9	10.1
Net profit margin	%	3.3	19.8

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AKME STAR 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 2.3 bn as compared to Rs 1.0 bn during FY22, a rise of 122.9%.
• Cost of deposits for AKME STAR fell 100.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 80 m during the year from Rs 124 m in FY22.
• Borrowing stood at Rs 0 m, a growth of 0.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 2.8 bn as against Rs 1.5 bn during FY22, thereby witnessing a rise of 86.1%.

AKME STAR Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	623	1,041	66.9%
Advances	Rs m	1,023	2,281	122.9%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	23.6	0.0
Investments	Rs m	124	80	-35.3%
Borrowings	Rs m	0	0	0.0%
Total Assets	Rs m	1,530	2,847	86.1%

Current Valuations for AKME STAR

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 0.9, an improvement from the EPS of Rs 0.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 70.0, stands at 46.3 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 5.2 times, while the price to income ratio stands at 9.1 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	11.3	4.6
Earnings per share (Unadj.)	Rs	0.4	0.9
Diluted earnings per share	Rs	0.1	0.9
Avg P/E ratio	Rs	252.0	46.3
Avg P/ABV ratio	Rs	6.5	5.2
Avg Market Cap	Rs	1,568	3,231
Dividends per share (Unadj.)	Rs	0.10	0.05

Ratio Analysis for AKME STAR

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 228,077.6x during FY23, from 102,314.6x 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 0.00x during FY23, from 0.00x 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): AKME STAR's capital adequacy ratio (CAR) was at 77.9% as on 31 March 2023 as compared to 84.8% 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 6.7% during FY23, from 1.0% 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 2.45% during FY23, from 0.41% 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 9.46% during FY23, from 5.78% 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. AKME STAR's gross NPA ratio stood at 1.7% as of 31 March 2023 compared to 3.0% 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 AKME STAR was 1.3% in financial year 2023. This compared with 2.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	102,314.6	228,077.6
Debt to Equity Ratio	x	0.0	0.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	84.8	77.9
Return on Equity	%	1.0	6.7
Return on Assets	%	0.4	2.5
Return on Capital Employed	%	5.8	9.5
% of Gross NPAs	%	3.0	1.7
% of Net NPAs	%	2.4	1.3
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

AKME STAR Share Price Performance

Over the last one year, AKME STAR share price has moved up from Rs 52.2 to Rs 70.0, registering a gain of Rs 17.8 or around 34.0%.

Overall, the S&P BSE SENSEX is up 6.7% over the year.

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