CUMMINS INDIA 2022-23 Annual Report Analysis

Wed, 12 Jul

CUMMINS INDIA 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.

CUMMINS INDIA Income Statement Analysis

• Operating income during the year rose 25.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 30.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 18.5% in FY23 as against 17.8% in FY22.
• Depreciation charges increased by 4.7% and finance costs increased by 33.6% YoY, respectively.
• Other income grew by 21.7% YoY.
• Net profit for the year grew by 31.5% YoY.
• Net profit margins during the year grew from 15.1% in FY22 to 15.8% in FY23.

CUMMINS INDIA Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	61,709	77,721	25.9%
Other income	Rs m	2,544	3,095	21.7%
Total Revenues	Rs m	64,253	80,816	25.8%
Gross profit	Rs m	11,004	14,401	30.9%
Depreciation	Rs m	1,356	1,420	4.7%
Interest	Rs m	122	162	33.6%
Profit before tax	Rs m	12,070	15,913	31.8%
Tax	Rs m	2,732	3,631	32.9%
Profit after tax	Rs m	9,337	12,282	31.5%
Gross profit margin	%	17.8	18.5
Effective tax rate	%	22.6	22.8
Net profit margin	%	15.1	15.8

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CUMMINS INDIA Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 19 billion as compared to Rs 17 billion in FY22, thereby witnessing an increase of 8.4%.
• Current assets rose 16% and stood at Rs 51 billion, while fixed assets rose 5% and stood at Rs 28 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 79 billion as against Rs 71 billion during FY22, thereby witnessing a growth of 11%.

CUMMINS INDIA Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	51,450	57,582	11.9
Current Liabilities	Rs m	17,446	18,904	8.4
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	71,120	79,186	11.3
Current assets	Rs m	44,134	50,985	15.5
Fixed Assets	Rs m	26,986	28,202	4.5
Total Assets	Rs m	71,120	79,186	11.3

CUMMINS INDIA Cash Flow Statement Analysis

• CUMMINS INDIA's cash flow from operating activities (CFO) during FY23 stood at Rs 8 billion, an improvement of 15.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 691 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 2 billion from the Rs 558 million net cash flows seen during FY22.

CUMMINS INDIA 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	7,119	8,197	15.1%
Cash Flow from Investing Activities	Rs m	-5,863	691	-
Cash Flow from Financing Activities	Rs m	-823	-6,873	-
Net Cash Flow	Rs m	558	2,193	292.7%

Current Valuations for CUMMINS INDIA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 44.3, an improvement from the EPS of Rs 33.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,896.0, stands at 51.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 9.1 times, while the price to sales ratio stands at 6.8 times.
• The company's price to cash flow (P/CF) ratio stood at 26.9 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	222.6	280.4
TTM Earnings per share	Rs	33.7	44.3
Diluted earnings per share	Rs	33.7	44.3
Price to Cash Flow	x	29.1	26.9
TTM P/E ratio	x	37.0	51.5
Price / Book Value ratio	x	5.1	6.4
Market Cap	Rs m	260,630	368,967
Dividends per share (Unadj.)	Rs	18.5	25.0

Ratio Analysis for CUMMINS INDIA

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.7x during FY23, from 2.5x 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 deteriorated and stood at 99.0x during FY23, from 100.3x 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 21.3% during FY23, from 18.1% 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 27.9% during FY23, from 23.7% 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 15.7% during FY23, from 13.3% 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	2.5	2.7
Debtors’ Days	Days	7	8
Interest coverage	x	100.3	99.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	13.3	15.7
Return on equity	%	18.1	21.3
Return on capital employed	%	23.7	27.9

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

CUMMINS INDIA Share Price Performance

Over the last one year, CUMMINS INDIA share price has moved up from Rs 1,092.8 to Rs 1,896.0, registering a gain of Rs 803.3 or around 73.5%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 41,312.2 (up 0.0%). Over the last one year it has moved up from 27,225.4 to 41,312.2, a gain of 14,087 points (up 51.7%).

Overall, the S&P BSE SENSEX is up 20.2% over the year.

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