GAIL 2022-23 Annual Report Analysis

Wed, 2 Aug

GAIL 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.

GAIL Income Statement Analysis

• Operating income during the year rose 57.0% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 47.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 6.1% in FY23 as against 18.3% in FY22.
• Depreciation charges increased by 11.6% and finance costs increased by 73.9% YoY, respectively.
• Other income grew by 22.4% YoY.
• Net profit for the year declined by 54.5% YoY.
• Net profit margins during the year declined from 13.3% in FY22 to 3.8% in FY23.

GAIL Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	926,658	1,454,616	57.0%
Other income	Rs m	11,830	14,478	22.4%
Total Revenues	Rs m	938,489	1,469,094	56.5%
Gross profit	Rs m	169,139	88,811	-47.5%
Depreciation	Rs m	24,202	27,016	11.6%
Interest	Rs m	2,133	3,710	73.9%
Profit before tax	Rs m	154,635	72,564	-53.1%
Tax	Rs m	31,599	16,605	-47.5%
Profit after tax	Rs m	123,036	55,959	-54.5%
Gross profit margin	%	18.3	6.1
Effective tax rate	%	20.4	22.9
Net profit margin	%	13.3	3.8

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GAIL Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 217 billion as compared to Rs 151 billion in FY22, thereby witnessing an increase of 43.8%.
• Long-term debt stood at Rs 89 billion as compared to Rs 55 billion during FY22, a growth of 62.4%.
• Current assets rose 26% and stood at Rs 205 billion, while fixed assets rose 6% and stood at Rs 887 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,093 billion as against Rs 1,000 billion during FY22, thereby witnessing a growth of 9%.

GAIL Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	641,143	649,274	1.3
Current Liabilities	Rs m	150,933	217,110	43.8
Long-term Debt	Rs m	54,681	88,797	62.4
Total Liabilities	Rs m	999,638	1,092,775	9.3
Current assets	Rs m	163,072	205,307	25.9
Fixed Assets	Rs m	836,566	887,468	6.1
Total Assets	Rs m	999,638	1,092,775	9.3

GAIL Cash Flow Statement Analysis

• GAIL's cash flow from operating activities (CFO) during FY23 stood at Rs 32 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -76 billion, an improvement of 40.5% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 30 billion, an improvement of 176% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -13 billion from the Rs 132 million net cash flows seen during FY22.

GAIL 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	94,199	32,047	-66.0%
Cash Flow from Investing Activities	Rs m	-54,360	-76,401	-
Cash Flow from Financing Activities	Rs m	-39,167	29,721	-
Net Cash Flow	Rs m	132	-12,760	-

Current Valuations for GAIL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.5, an decline from the EPS of Rs 27.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 116.2, stands at 29.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 7.9 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	208.7	221.2
TTM Earnings per share	Rs	27.7	8.5
Diluted earnings per share	Rs	18.7	8.5
Price to Cash Flow	x	4.6	7.9
TTM P/E ratio	x	6.5	29.6
Price / Book Value ratio	x	1.0	1.0
Market Cap	Rs m	658,398	653,017
Dividends per share (Unadj.)	Rs	10.0	5.0

Ratio Analysis for GAIL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY23, from 1.1x 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 20.6x during FY23, from 73.5x 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 declined and down at 8.6% during FY23, from 19.2% 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 declined and down at 10.3% during FY23, from 22.5% 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 declined and down at 5.5% during FY23, from 12.5% 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	1.1	0.9
Debtors’ Days	Days	3	3
Interest coverage	x	73.5	20.6
Debt to equity ratio	x	0.1	0.1
Return on assets	%	12.5	5.5
Return on equity	%	19.2	8.6
Return on capital employed	%	22.5	10.3

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

GAIL Share Price Performance

Over the last one year, GAIL share price has moved up from Rs 94.4 to Rs 116.2, registering a gain of Rs 21.8 or around 23.1%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 19,105.7 (down 1.5%). Over the last one year it has moved down from 19,365.6 to 19,105.7, a loss of 260 points (down 1.3%).

Overall, the S&P BSE SENSEX is up 13.2% over the year.

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