KANSAI NEROLAC 2020-21 Annual Report Analysis

Wed, 31 Mar

KANSAI NEROLAC 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.

KANSAI NEROLAC Income Statement Analysis

• Operating income during the year fell 3.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 17.0% in FY21 as against 15.2% in FY20.
• Depreciation charges increased by 16.3% and finance costs increased by 13.5% YoY, respectively.
• Other income grew by 49.7% YoY.
• Net profit for the year grew by 1.9% YoY.
• Net profit margins during the year grew from 9.8% in FY20 to 10.4% in FY21.

KANSAI NEROLAC Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	52,800	50,743	-3.9%
Other income	Rs m	255	382	49.7%
Total Revenues	Rs m	53,055	51,125	-3.6%
Gross profit	Rs m	8,045	8,633	7.3%
Depreciation	Rs m	1,421	1,653	16.3%
Interest	Rs m	209	237	13.5%
Profit before tax	Rs m	6,670	7,125	6.8%
Tax	Rs m	1,512	1,867	23.5%
Profit after tax	Rs m	5,158	5,257	1.9%
Gross profit margin	%	15.2	17.0
Effective tax rate	%	22.7	26.2
Net profit margin	%	9.8	10.4

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KANSAI NEROLAC Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 12 billion as compared to Rs 9 billion in FY20, thereby witnessing an increase of 35.2%.
• Long-term debt down at Rs 172 million as compared to Rs 234 million during FY20, a fall of 26.7%.
• Current assets rose 28% and stood at Rs 32 billion, while fixed assets fell 2% and stood at Rs 24 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 55 billion as against Rs 49 billion during FY20, thereby witnessing a growth of 13%.

KANSAI NEROLAC Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	37,603	40,529	7.8
Current Liabilities	Rs m	9,172	12,405	35.2
Long-term Debt	Rs m	234	172	-26.7
Total Liabilities	Rs m	48,836	55,334	13.3
Current assets	Rs m	24,885	31,779	27.7
Fixed Assets	Rs m	23,951	23,555	-1.7
Total Assets	Rs m	48,836	55,334	13.3

KANSAI NEROLAC Cash Flow Statement Analysis

• KANSAI NEROLAC's cash flow from operating activities (CFO) during FY21 stood at Rs 6 billion, an improvement of 8.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -5 billion, an improvement of 20.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -802 million from the Rs 782 million net cash flows seen during FY20.

KANSAI NEROLAC 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	5,951	6,459	8.5%
Cash Flow from Investing Activities	Rs m	-3,762	-4,528	-
Cash Flow from Financing Activities	Rs m	-1,407	-2,742	-
Net Cash Flow	Rs m	782	-802	-

Current Valuations for KANSAI NEROLAC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 9.8, an improvement from the EPS of Rs 9.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 600.7, stands at 61.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.0 times, while the price to sales ratio stands at 6.4 times.
• The company's price to cash flow (P/CF) ratio stood at 39.5 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	98.0	94.2
TTM Earnings per share	Rs	9.6	9.8
Diluted earnings per share	Rs	9.6	9.8
Price to Cash Flow	x	31.6	39.5
TTM P/E ratio	x	40.3	61.6
Price / Book Value ratio	x	6.2	6.7
Market Cap	Rs m	234,241	272,855
Dividends per share (Unadj.)	Rs	3.2	5.3

Ratio Analysis for KANSAI NEROLAC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.6x during FY21, from 2.7x 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 deteriorated and stood at 31.0x during FY21, from 32.9x 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 declined and down at 13.0% during FY21, from 13.7% 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 declined and down at 18.1% during FY21, from 18.2% 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 9.9% during FY21, from 11.0% 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	2.7	2.6
Debtors’ Days	Days	5	7
Interest coverage	x	32.9	31.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	11.0	9.9
Return on equity	%	13.7	13.0
Return on capital employed	%	18.2	18.1

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

KANSAI NEROLAC Share Price Performance

Over the last one year, KANSAI NEROLAC share price has moved up from Rs 386.2 to Rs 600.7, registering a gain of Rs 214.5 or around 55.5%.

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

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

Read: Latest Annual Report Analysis of KANSAI NEROLAC