KANSAI NEROLAC 2021-22 Annual Report Analysis

Wed, 8 Jun

KANSAI NEROLAC has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

KANSAI NEROLAC Income Statement Analysis

• Operating income during the year rose 25.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 24.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.2% in FY22 as against 17.0% in FY21.
• Depreciation charges increased by 2.7% and finance costs increased by 20.4% YoY, respectively.
• Other income declined by 33.5% YoY.
• Net profit for the year declined by 34.7% YoY.
• Net profit margins during the year declined from 10.4% in FY21 to 5.4% in FY22.

KANSAI NEROLAC Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	50,743	63,694	25.5%
Other income	Rs m	382	254	-33.5%
Total Revenues	Rs m	51,125	63,948	25.1%
Gross profit	Rs m	8,633	6,494	-24.8%
Depreciation	Rs m	1,653	1,698	2.7%
Interest	Rs m	237	286	20.4%
Profit before tax	Rs m	7,125	4,764	-33.1%
Tax	Rs m	1,867	1,333	-28.6%
Profit after tax	Rs m	5,257	3,432	-34.7%
Gross profit margin	%	17.0	10.2
Effective tax rate	%	26.2	28.0
Net profit margin	%	10.4	5.4

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KANSAI NEROLAC Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 13 billion as compared to Rs 12 billion in FY21, thereby witnessing an increase of 6.9%.
• Long-term debt down at Rs 109 million as compared to Rs 172 million during FY21, a fall of 36.4%.
• Current assets rose 2% and stood at Rs 32 billion, while fixed assets rose 5% and stood at Rs 25 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 57 billion as against Rs 55 billion during FY21, thereby witnessing a growth of 3%.

KANSAI NEROLAC Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	40,529	41,322	2.0
Current Liabilities	Rs m	12,405	13,261	6.9
Long-term Debt	Rs m	172	109	-36.4
Total Liabilities	Rs m	55,334	57,094	3.2
Current assets	Rs m	31,779	32,303	1.6
Fixed Assets	Rs m	23,555	24,791	5.2
Total Assets	Rs m	55,334	57,094	3.2

KANSAI NEROLAC Cash Flow Statement Analysis

• KANSAI NEROLAC's cash flow from operating activities (CFO) during FY22 stood at Rs 248 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs 2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs -361 million from the Rs -802 million net cash flows seen during FY21.

KANSAI NEROLAC Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	6,459	248	-96.2%
Cash Flow from Investing Activities	Rs m	-4,528	2,495	-
Cash Flow from Financing Activities	Rs m	-2,742	-3,093	-
Net Cash Flow	Rs m	-802	-361	-

Current Valuations for KANSAI NEROLAC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 6.4, an decline from the EPS of Rs 9.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 402.5, stands at 63.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.2 times, while the price to sales ratio stands at 3.4 times.
• The company's price to cash flow (P/CF) ratio stood at 57.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	94.2	118.2
TTM Earnings per share	Rs	9.8	6.4
Diluted earnings per share	Rs	9.8	6.4
Price to Cash Flow	x	46.8	57.6
TTM P/E ratio	x	61.6	63.2
Price / Book Value ratio	x	6.7	7.1
Market Cap	Rs m	272,855	295,382
Dividends per share (Unadj.)	Rs	5.3	2.3

Ratio Analysis for KANSAI NEROLAC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY22, from 2.6x during FY21. 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 17.7x during FY22, from 31.0x during FY21. 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 8.3% during FY22, from 13.0% during FY22. 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 12.2% during FY22, from 18.1% during FY21. 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 6.5% during FY22, from 9.9% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	2.6	2.4
Debtors’ Days	Days	7	6
Interest coverage	x	31.0	17.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.9	6.5
Return on equity	%	13.0	8.3
Return on capital employed	%	18.1	12.2

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 down from Rs 591.1 to Rs 402.5, registering a loss of Rs 188.6 or around 31.9%.

Overall, the S&P BSE SENSEX is up 5.5% 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