FIRSTSOURCE SOLUTIONS 2020-21 Annual Report Analysis

Wed, 31 Mar

FIRSTSOURCE SOLUTIONS 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.

FIRSTSOURCE SOLUTIONS Income Statement Analysis

• Operating income during the year rose 23.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 9.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.5% in FY21 as against 15.3% in FY20.
• Depreciation charges increased by 11.4% and finance costs decreased by 10.4% YoY, respectively.
• Other income declined by 57.5% YoY.
• Net profit for the year grew by 6.5% YoY.
• Net profit margins during the year declined from 8.3% in FY20 to 7.1% in FY21.

FIRSTSOURCE SOLUTIONS Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	40,986	50,780	23.9%
Other income	Rs m	91	39	-57.5%
Total Revenues	Rs m	41,078	50,819	23.7%
Gross profit	Rs m	6,286	6,865	9.2%
Depreciation	Rs m	1,852	2,064	11.4%
Interest	Rs m	583	522	-10.4%
Profit before tax	Rs m	3,942	4,318	9.5%
Tax	Rs m	545	702	28.7%
Profit after tax	Rs m	3,397	3,617	6.5%
Gross profit margin	%	15.3	13.5
Effective tax rate	%	13.8	16.2
Net profit margin	%	8.3	7.1

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FIRSTSOURCE SOLUTIONS Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 14 billion as compared to Rs 13 billion in FY20, thereby witnessing an increase of 5.3%.
• Long-term debt stood at Rs 846 million as compared to Rs 28 million during FY20, a growth of 2945.8%.
• Current assets rose 11% and stood at Rs 12 billion, while fixed assets rose 3% and stood at Rs 33 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 46 billion as against Rs 43 billion during FY20, thereby witnessing a growth of 5%.

FIRSTSOURCE SOLUTIONS Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	27,534	27,709	0.6
Current Liabilities	Rs m	13,309	14,016	5.3
Long-term Debt	Rs m	28	846	2,945.8
Total Liabilities	Rs m	43,359	45,605	5.2
Current assets	Rs m	11,043	12,313	11.5
Fixed Assets	Rs m	32,316	33,292	3.0
Total Assets	Rs m	43,359	45,605	5.2

FIRSTSOURCE SOLUTIONS Cash Flow Statement Analysis

• FIRSTSOURCE SOLUTIONS's cash flow from operating activities (CFO) during FY21 stood at Rs 10 billion, an improvement of 137.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -534 million from the Rs 1 billion net cash flows seen during FY20.

FIRSTSOURCE SOLUTIONS 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	4,104	9,756	137.7%
Cash Flow from Investing Activities	Rs m	143	-3,496	-
Cash Flow from Financing Activities	Rs m	-2,768	-6,887	-
Net Cash Flow	Rs m	1,434	-534	-

Current Valuations for FIRSTSOURCE SOLUTIONS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 5.2, an improvement from the EPS of Rs 4.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 113.9, stands at 21.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.9 times, while the price to sales ratio stands at 1.6 times.
• The company's price to cash flow (P/CF) ratio stood at 9.3 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	59.1	72.9
TTM Earnings per share	Rs	4.9	5.2
Diluted earnings per share	Rs	4.9	5.2
Price to Cash Flow	x	3.7	9.3
TTM P/E ratio	x	5.6	21.9
Price / Book Value ratio	x	1.0	1.9
Market Cap	Rs m	27,233	52,851
Dividends per share (Unadj.)	Rs	2.5	3.0

Ratio Analysis for FIRSTSOURCE SOLUTIONS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.9x during FY21, from 0.8x 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 9.3x during FY21, from 7.8x 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 13.1% during FY21, from 12.3% 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 17.0% during FY21, from 16.4% 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 declined and down at 9.1% during FY21, from 9.2% 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	0.8	0.9
Debtors’ Days	Days	50	41
Interest coverage	x	7.8	9.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.2	9.1
Return on equity	%	12.3	13.1
Return on capital employed	%	16.4	17.0

To see how FIRSTSOURCE SOLUTIONS has performed over the last 5 years, please visit here.

FIRSTSOURCE SOLUTIONS Share Price Performance

Over the last one year, FIRSTSOURCE SOLUTIONS share price has moved up from Rs 27.5 to Rs 113.9, registering a gain of Rs 86.4 or around 314.2%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

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

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

Read: Latest Annual Report Analysis of FIRSTSOURCE SOLUTIONS