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

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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

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	-

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

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

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)

Read: Latest Annual Report Analysis of CEAT