CEAT 2021-22 Annual Report Analysis

Tue, 14 Jun

CEAT has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

CEAT Income Statement Analysis

• Operating income during the year rose 23.0% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 25.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 7.4% in FY22 as against 12.2% in FY21.
• Depreciation charges increased by 28.1% and finance costs increased by 17.5% YoY, respectively.
• Other income declined by 58.0% YoY.
• Net profit for the year declined by 89.4% YoY.
• Net profit margins during the year declined from 5.2% in FY21 to 0.4% in FY22.

CEAT Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	76,096	93,634	23.0%
Other income	Rs m	381	160	-58.0%
Total Revenues	Rs m	76,477	93,794	22.6%
Gross profit	Rs m	9,279	6,955	-25.0%
Depreciation	Rs m	3,396	4,352	28.1%
Interest	Rs m	1,788	2,101	17.5%
Profit before tax	Rs m	4,476	661	-85.2%
Tax	Rs m	516	243	-52.9%
Profit after tax	Rs m	3,960	418	-89.4%
Gross profit margin	%	12.2	7.4
Effective tax rate	%	11.5	36.7
Net profit margin	%	5.2	0.4

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CEAT Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 37 billion as compared to Rs 30 billion in FY21, thereby witnessing an increase of 20.3%.
• Long-term debt stood at Rs 17 billion as compared to Rs 13 billion during FY21, a growth of 28.2%.
• Current assets rose 18% and stood at Rs 26 billion, while fixed assets rose 11% and stood at Rs 65 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 92 billion as against Rs 81 billion during FY21, thereby witnessing a growth of 13%.

CEAT Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	33,163	32,728	-1.3
Current Liabilities	Rs m	30,462	36,634	20.3
Long-term Debt	Rs m	13,410	17,192	28.2
Total Liabilities	Rs m	81,309	91,595	12.7
Current assets	Rs m	22,404	26,417	17.9
Fixed Assets	Rs m	58,905	65,179	10.6
Total Assets	Rs m	81,309	91,595	12.7

CEAT Cash Flow Statement Analysis

• CEAT's cash flow from operating activities (CFO) during FY22 stood at Rs 6 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -9 billion, an improvement of 52.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs 3 billion, an improvement of 143% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs -123 million from the Rs 87 million net cash flows seen during FY21.

CEAT Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	13,577	6,189	-54.4%
Cash Flow from Investing Activities	Rs m	-6,181	-9,444	-
Cash Flow from Financing Activities	Rs m	-7,309	3,132	-
Net Cash Flow	Rs m	87	-123	-

Current Valuations for CEAT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.3, an decline from the EPS of Rs 97.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 951.0, stands at 92.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.4 times.
• The company's price to cash flow (P/CF) ratio stood at 10.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	1,881.2	2,314.8
TTM Earnings per share	Rs	97.9	10.3
Diluted earnings per share	Rs	97.9	10.3
Price to Cash Flow	x	8.6	10.7
TTM P/E ratio	x	15.9	92.0
Price / Book Value ratio	x	1.5	1.6
Market Cap	Rs m	49,720	51,249
Dividends per share (Unadj.)	Rs	18.0	3.0

Ratio Analysis for CEAT

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.7x during FY22, from 0.7x during FY21. 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 1.3x during FY22, from 3.5x during FY21. 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 1.3% during FY22, from 11.9% during FY22. 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 5.5% during FY22, from 13.4% during FY21. 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 2.8% during FY22, from 7.1% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	0.7	0.7
Debtors’ Days	Days	442	450
Interest coverage	x	3.5	1.3
Debt to equity ratio	x	0.4	0.5
Return on assets	%	7.1	2.8
Return on equity	%	11.9	1.3
Return on capital employed	%	13.4	5.5

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 down from Rs 1,363.3 to Rs 951.0, registering a loss of Rs 412.3 or around 30.2%.

Overall, the S&P BSE SENSEX is up 1.0% 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