DEN NETWORKS 2020-21 Annual Report Analysis

Wed, 31 Mar

DEN NETWORKS 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.

DEN NETWORKS Income Statement Analysis

• Operating income during the year rose 1.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 35.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.1% in FY21 as against 14.3% in FY20.
• Depreciation charges increased by 1.6% and finance costs decreased by 89.5% YoY, respectively.
• Other income declined by 2.5% YoY.
• Net profit for the year grew by 241.7% YoY.
• Net profit margins during the year grew from 4.5% in FY20 to 15.0% in FY21.

DEN NETWORKS Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	12,915	13,074	1.2%
Other income	Rs m	2,021	1,970	-2.5%
Total Revenues	Rs m	14,936	15,044	0.7%
Gross profit	Rs m	1,852	2,501	35.0%
Depreciation	Rs m	2,468	2,506	1.6%
Interest	Rs m	318	33	-89.5%
Profit before tax	Rs m	1,087	1,931	77.7%
Tax	Rs m	512	-34	-106.6%
Profit after tax	Rs m	575	1,965	241.7%
Gross profit margin	%	14.3	19.1
Effective tax rate	%	47.1	-1.8
Net profit margin	%	4.5	15.0

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DEN NETWORKS Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 5 billion as compared to Rs 8 billion in FY20, thereby witnessing an decrease of -39.7%.
• Current assets fell 1% and stood at Rs 26 billion, while fixed assets fell 24% and stood at Rs 9 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 34 billion as against Rs 37 billion during FY20, thereby witnessing a fall of 8%.

DEN NETWORKS Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	26,026	27,746	6.6
Current Liabilities	Rs m	8,093	4,878	-39.7
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	37,343	34,285	-8.2
Current assets	Rs m	26,104	25,736	-1.4
Fixed Assets	Rs m	11,238	8,549	-23.9
Total Assets	Rs m	37,343	34,285	-8.2

DEN NETWORKS Cash Flow Statement Analysis

• DEN NETWORKS's cash flow from operating activities (CFO) during FY21 stood at Rs 2 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -4 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs 1 billion, an improvement of 120% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -90 million from the Rs 90 million net cash flows seen during FY20.

DEN NETWORKS 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	2,680	2,177	-18.7%
Cash Flow from Investing Activities	Rs m	4,289	-3,612	-
Cash Flow from Financing Activities	Rs m	-6,879	1,344	-
Net Cash Flow	Rs m	90	-90	-

Current Valuations for DEN NETWORKS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 4.1, an improvement from the EPS of Rs 1.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 49.3, stands at 12.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.8 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 7.7 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	27.1	27.4
TTM Earnings per share	Rs	1.2	4.1
Diluted earnings per share	Rs	1.2	4.1
Price to Cash Flow	x	4.6	7.7
TTM P/E ratio	x	24.6	12.0
Price / Book Value ratio	x	1.1	1.2
Market Cap	Rs m	29,524	34,577
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for DEN NETWORKS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 5.3x during FY21, from 3.2x 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 58.7x during FY21, from 4.4x 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 7.1% during FY21, from 2.2% 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 7.1% during FY21, from 5.4% 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 5.8% during FY21, from 2.4% 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	3.2	5.3
Debtors’ Days	Days	38	26
Interest coverage	x	4.4	58.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	2.4	5.8
Return on equity	%	2.2	7.1
Return on capital employed	%	5.4	7.1

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

DEN NETWORKS Share Price Performance

Over the last one year, DEN NETWORKS share price has moved up from Rs 29.7 to Rs 49.3, registering a gain of Rs 19.6 or around 66.1%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 11,919.9 (down 0.9%). Over the last one year it has moved up from 6,403.4 to 11,919.9, a gain of 5,517 points (up 86.1%).

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

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

Read: Latest Annual Report Analysis of DEN NETWORKS