CEAT 2022-23 Annual Report Analysis

Wed, 14 Jun

CEAT 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.

CEAT Income Statement Analysis

• Operating income during the year rose 20.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 31.1% YoY during the fiscal. Operating profit margins witnessed a fall and down at 8.4% in FY23 as against 7.7% in FY22.
• Depreciation charges increased by 7.8% and finance costs increased by 17.0% YoY, respectively.
• Other income grew by 24.4% YoY.
• Net profit for the year grew by 158.4% YoY.
• Net profit margins during the year grew from 0.8% in FY22 to 1.6% in FY23.

CEAT Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	93,634	113,149	20.8%
Other income	Rs m	152	189	24.4%
Total Revenues	Rs m	93,786	113,337	20.8%
Gross profit	Rs m	7,219	9,467	31.1%
Depreciation	Rs m	4,352	4,693	7.8%
Interest	Rs m	2,070	2,421	17.0%
Profit before tax	Rs m	949	2,541	167.9%
Tax	Rs m	243	718	195.3%
Profit after tax	Rs m	706	1,824	158.4%
Gross profit margin	%	7.7	8.4
Effective tax rate	%	25.6	28.2
Net profit margin	%	0.8	1.6

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CEAT Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 41 billion as compared to Rs 37 billion in FY22, thereby witnessing an increase of 13.0%.
• Long-term debt down at Rs 14 billion as compared to Rs 17 billion during FY22, a fall of 16.2%.
• Current assets rose 2% and stood at Rs 27 billion, while fixed assets rose 6% and stood at Rs 69 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 96 billion as against Rs 92 billion during FY22, thereby witnessing a growth of 5%.

CEAT Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	32,728	34,396	5.1
Current Liabilities	Rs m	36,700	41,455	13.0
Long-term Debt	Rs m	17,192	14,406	-16.2
Total Liabilities	Rs m	91,662	96,277	5.0
Current assets	Rs m	26,483	26,897	1.6
Fixed Assets	Rs m	65,179	69,379	6.4
Total Assets	Rs m	91,662	96,277	5.0

CEAT Cash Flow Statement Analysis

• CEAT's cash flow from operating activities (CFO) during FY23 stood at Rs 12 billion, an improvement of 94.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -8 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 369 million from the Rs -123 million net cash flows seen during FY22.

CEAT 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	6,189	12,055	94.8%
Cash Flow from Investing Activities	Rs m	-9,444	-8,491	-
Cash Flow from Financing Activities	Rs m	3,132	-3,195	-
Net Cash Flow	Rs m	-123	369	-

Current Valuations for CEAT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 45.1, an improvement from the EPS of Rs 17.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,045.1, stands at 47.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.4 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 8.9 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	2,314.8	2,797.3
TTM Earnings per share	Rs	17.4	45.1
Diluted earnings per share	Rs	17.4	45.1
Price to Cash Flow	x	7.5	8.9
TTM P/E ratio	x	90.1	47.5
Price / Book Value ratio	x	1.6	1.7
Market Cap	Rs m	51,249	58,075
Dividends per share (Unadj.)	Rs	3.0	12.0

Ratio Analysis for CEAT

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.6x during FY23, from 0.7x 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 improved and stood at 2.0x during FY23, from 1.5x 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 improved and stood at 5.3% during FY23, from 2.2% 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 improved and stood at 10.2% during FY23, from 6.0% 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 improved and stood at 4.4% during FY23, from 3.0% 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	0.7	0.6
Debtors’ Days	Days	450	422
Interest coverage	x	1.5	2.0
Debt to equity ratio	x	0.5	0.4
Return on assets	%	3.0	4.4
Return on equity	%	2.2	5.3
Return on capital employed	%	6.0	10.2

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 936.5 to Rs 2,045.1, registering a gain of Rs 1,108.6 or around 118.4%.

Overall, the S&P BSE SENSEX is up 19.3% over the year.

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