DEN NETWORKS 2022-23 Annual Report Analysis

Fri, 11 Aug

DEN NETWORKS 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.

DEN NETWORKS Income Statement Analysis

• Operating income during the year fell 7.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 94.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 0.9% in FY23 as against 15.6% in FY22.
• Depreciation charges decreased by 19.5% and finance costs increased by 405.0% YoY, respectively.
• Other income grew by 92.6% YoY.
• Net profit for the year grew by 38.2% YoY.
• Net profit margins during the year grew from 14.0% in FY22 to 20.9% in FY23.

DEN NETWORKS Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	12,256	11,305	-7.8%
Other income	Rs m	1,317	2,537	92.6%
Total Revenues	Rs m	13,573	13,842	2.0%
Gross profit	Rs m	1,907	103	-94.6%
Depreciation	Rs m	1,482	1,193	-19.5%
Interest	Rs m	3	14	405.0%
Profit before tax	Rs m	1,739	1,433	-17.6%
Tax	Rs m	28	-931	NA
Profit after tax	Rs m	1,711	2,364	38.2%
Gross profit margin	%	15.6	0.9
Effective tax rate	%	1.6	-64.9
Net profit margin	%	14.0	20.9

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DEN NETWORKS Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 4 billion as compared to Rs 4 billion in FY22, thereby witnessing an increase of 3.7%.
• Current assets rose 6% and stood at Rs 29 billion, while fixed assets fell 2% and stood at Rs 8 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 36 billion as against Rs 35 billion during FY22, thereby witnessing a growth of 4%.

DEN NETWORKS Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	29,531	32,074	8.6
Current Liabilities	Rs m	4,171	4,323	3.7
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	34,835	36,390	4.5
Current assets	Rs m	27,008	28,704	6.3
Fixed Assets	Rs m	7,826	7,685	-1.8
Total Assets	Rs m	34,835	36,390	4.5

DEN NETWORKS Cash Flow Statement Analysis

• DEN NETWORKS's cash flow from operating activities (CFO) during FY23 stood at Rs 1 billion, an improvement of 8.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -543 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -300 million from the Rs -331 million net cash flows seen during FY22.

DEN NETWORKS 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	1,290	1,393	8.0%
Cash Flow from Investing Activities	Rs m	-2,579	-543	-
Cash Flow from Financing Activities	Rs m	959	-1,150	-
Net Cash Flow	Rs m	-331	-300	-

Current Valuations for DEN NETWORKS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 5.0, an improvement from the EPS of Rs 3.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 43.8, stands at 7.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.7 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 4.8 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	25.7	23.7
TTM Earnings per share	Rs	3.6	5.0
Diluted earnings per share	Rs	3.6	5.0
Price to Cash Flow	x	5.5	4.8
TTM P/E ratio	x	10.2	7.8
Price / Book Value ratio	x	0.8	0.5
Market Cap	Rs m	23,969	17,021
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 6.6x during FY23, from 6.5x 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 103.1x during FY23, from 626.5x 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 7.4% during FY23, from 5.8% 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 declined and down at 4.5% during FY23, from 5.9% 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 6.5% during FY23, from 4.9% 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	6.5	6.6
Debtors’ Days	Days	21	28
Interest coverage	x	626.5	103.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	4.9	6.5
Return on equity	%	5.8	7.4
Return on capital employed	%	5.9	4.5

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 34.0 to Rs 43.8, registering a gain of Rs 9.8 or around 28.7%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 13,937.9 (down 0.2%). Over the last one year it has moved up from 13,931.6 to 13,937.9, a gain of 6 points (up 0.0%).

Overall, the S&P BSE SENSEX is up 11.7% over the year.

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