CEAT 2020-21 Annual Report Analysis

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CEAT 2020-21 Annual Report Analysis
Wed, 31 Mar

CEAT 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.

CEAT Income Statement Analysis

  • Operating income during the year rose 12.3% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 33.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 12.2% in FY21 as against 10.2% in FY20.
  • Depreciation charges increased by 22.8% and finance costs increased by 16.1% YoY, respectively.
  • Other income grew by 67.8% YoY.
  • Net profit for the year grew by 86.1% YoY.
  • Net profit margins during the year grew from 3.1% in FY20 to 5.2% in FY21.

CEAT Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 67,788 76,096 12.3%
Other income Rs m 227 381 67.8%
Total Revenues Rs m 68,015 76,477 12.4%
Gross profit Rs m 6,948 9,279 33.5%
Depreciation Rs m 2,765 3,396 22.8%
Interest Rs m 1,539 1,788 16.1%
Profit before tax Rs m 2,871 4,476 55.9%
Tax Rs m 742 516 -30.5%
Profit after tax Rs m 2,128 3,960 86.1%
Gross profit margin % 10.2 12.2
Effective tax rate % 25.9 11.5
Net profit margin % 3.1 5.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Update: Richa is Very Bullish on this Little-known Smallcap Stock

CEAT Balance Sheet Analysis

  • The company's current liabilities during FY21 stood at Rs 30 billion as compared to Rs 23 billion in FY20, thereby witnessing an increase of 32.4%.
  • Long-term debt down at Rs 13 billion as compared to Rs 16 billion during FY20, a fall of 18.3%.
  • Current assets rose 22% and stood at Rs 22 billion, while fixed assets rose 7% and stood at Rs 59 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 81 billion as against Rs 74 billion during FY20, thereby witnessing a growth of 11%.

CEAT Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 29,079 33,163 14.0
 
Current Liabilities Rs m 23,014 30,462 32.4
Long-term Debt Rs m 16,408 13,410 -18.3
Total Liabilities Rs m 73,523 81,309 10.6
 
Current assets Rs m 18,293 22,404 22.5
Fixed Assets Rs m 55,230 58,905 6.7
Total Assets Rs m 73,523 81,309 10.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



CEAT Cash Flow Statement Analysis

  • CEAT's cash flow from operating activities (CFO) during FY21 stood at Rs 14 billion, an improvement of 42.0% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -6 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -7 billion on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs 87 million from the Rs -402 million net cash flows seen during FY20.

CEAT 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 9,563 13,577 42.0%
Cash Flow from Investing Activities Rs m -10,755 -6,181 -
Cash Flow from Financing Activities Rs m 790 -7,309 -
Net Cash Flow Rs m -402 87 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for CEAT

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 97.9, an improvement from the EPS of Rs 52.6 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,561.3, stands at 15.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 1.9 times, while the price to sales ratio stands at 0.8 times.
  • The company's price to cash flow (P/CF) ratio stood at 6.8 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 1,675.9 1,881.2
TTM Earnings per share Rs 52.6 97.9
Diluted earnings per share Rs 52.6 97.9
Price to Cash Flow x 6.5 6.8
TTM P/E ratio x 15.0 15.9
Price / Book Value ratio x 1.2 1.5
Market Cap Rs m 35,465 49,721
Dividends per share (Unadj.) Rs 12.0 18.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for CEAT

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 0.7x during FY21, from 0.8x 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 3.5x during FY21, from 2.9x 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 improved and stood at 11.9% during FY21, from 7.3% 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 improved and stood at 13.4% during FY21, from 9.7% 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 improved and stood at 7.1% during FY21, from 5.0% 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 0.8 0.7
Debtors’ Days Days 363 442
Interest coverage x 2.9 3.5
Debt to equity ratio x 0.6 0.4
Return on assets % 5.0 7.1
Return on equity % 7.3 11.9
Return on capital employed % 9.7 13.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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

CEAT Share Price Performance

Over the last one year, CEAT share price has moved up from Rs 787.1 to Rs 1,561.3, registering a gain of Rs 774.2 or around 98.4%.

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

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

Annual Report FAQs

What is the current share price of CEAT?

CEAT currently trades at Rs 935.2 per share. You can check out the latest share price performance of CEAT here...

What was the revenue of CEAT in FY21? How does it compare to earlier years?

The revenues of CEAT stood at Rs 76,477 m in FY21, which was up 12.4% compared to Rs 68,015 m reported in FY20.

CEAT's revenue has grown from Rs 51,107 m in FY17 to Rs 76,477 m in FY21.

Over the past 5 years, the revenue of CEAT has grown at a CAGR of 10.6%.

What was the net profit of CEAT in FY21? How does it compare to earlier years?

The net profit of CEAT stood at Rs 3,960 m in FY21, which was up 86.1% compared to Rs 2,128 m reported in FY20.

This compares to a net profit of Rs 2,309 m in FY19 and a net profit of Rs 2,103 m in FY18.

Over the past 5 years, CEAT net profit has grown at a CAGR of 4.6%.

What does the cash flow statement of CEAT reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of CEAT reveals:

  • Cash flow from operations increased in FY21 and stood at Rs 13,577 m as compared to Rs 9,563 m in FY20.
  • Cash flow from investments increased in FY21 and stood at Rs -6,181 m as compared to Rs -10,755 m in FY20.
  • Cash flow from financial activity decreased in FY21 and stood at Rs -7,309 m as compared to Rs 790 m in FY20.

Here's the cash flow statement of CEAT for the past 5 years.

(Rs m)FY17FY18FY19FY20FY21
From Operations3,3476,7245,6149,56313,577
From Investments-5,434-4,118-10,605-10,755-6,181
From Financial Activity2,191-2,0254,844790-7,309
Net Cashflow104582-146-40287

What does the Key Ratio analysis of CEAT reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of CEAT reveals:

  • Operating profit margins witnessed a fall and down at 12.2% in FY21 as against 10.2% in FY20.
  • Net profit margins grew from 3.1% in FY20 to 5.2% in FY21.
  • Debt to Equity ratio for FY21 stood at 0.4 as compared to 0.6 in FY20.

Here's the ratio/financial analysis of CEAT for the past 5 years.

 FY17FY18FY19FY20FY21
Operating Profit Margin (%)12.89.48.610.212.2
Net Profit Margin (%)6.53.43.33.15.2
Debt to Equity Ratio (x)0.40.20.40.60.4

Read: Latest Annual Report Analysis of CEAT

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