KANSAI NEROLAC 2022-23 Annual Report Analysis

Mon, 5 Jun

KANSAI NEROLAC 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.

KANSAI NEROLAC Income Statement Analysis

• Operating income during the year rose 18.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 26.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 10.8% in FY23 as against 10.2% in FY22.
• Depreciation charges increased by 6.1% and finance costs increased by 1.4% YoY, respectively.
• Other income grew by 2.2% YoY.
• Net profit for the year grew by 36.5% YoY.
• Net profit margins during the year grew from 5.4% in FY22 to 6.2% in FY23.

KANSAI NEROLAC Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	63,694	75,427	18.4%
Other income	Rs m	254	260	2.2%
Total Revenues	Rs m	63,948	75,687	18.4%
Gross profit	Rs m	6,494	8,180	26.0%
Depreciation	Rs m	1,698	1,801	6.1%
Interest	Rs m	286	290	1.4%
Profit before tax	Rs m	4,764	6,349	33.3%
Tax	Rs m	1,333	1,664	24.9%
Profit after tax	Rs m	3,432	4,685	36.5%
Gross profit margin	%	10.2	10.8
Effective tax rate	%	28.0	26.2
Net profit margin	%	5.4	6.2

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KANSAI NEROLAC Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 15 billion as compared to Rs 13 billion in FY22, thereby witnessing an increase of 13.6%.
• Long-term debt down at Rs 47 million as compared to Rs 109 million during FY22, a fall of 57.1%.
• Current assets rose 18% and stood at Rs 38 billion, while fixed assets rose 1% and stood at Rs 25 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 63 billion as against Rs 57 billion during FY22, thereby witnessing a growth of 10%.

KANSAI NEROLAC Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	41,322	45,300	9.6
Current Liabilities	Rs m	13,261	15,067	13.6
Long-term Debt	Rs m	109	47	-57.1
Total Liabilities	Rs m	57,094	63,064	10.5
Current assets	Rs m	32,303	38,031	17.7
Fixed Assets	Rs m	24,791	25,032	1.0
Total Assets	Rs m	57,094	63,064	10.5

KANSAI NEROLAC Cash Flow Statement Analysis

• KANSAI NEROLAC's cash flow from operating activities (CFO) during FY23 stood at Rs 4 billion, an improvement of 1,548.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -1 billion, an improvement of 57% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 487 million from the Rs -361 million net cash flows seen during FY22.

KANSAI NEROLAC 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	248	4,083	1,548.2%
Cash Flow from Investing Activities	Rs m	2,495	-2,269	-
Cash Flow from Financing Activities	Rs m	-3,093	-1,326	-
Net Cash Flow	Rs m	-361	487	-

Current Valuations for KANSAI NEROLAC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.7, an improvement from the EPS of Rs 6.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 428.6, stands at 49.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.1 times, while the price to sales ratio stands at 3.1 times.
• The company's price to cash flow (P/CF) ratio stood at 37.1 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	118.2	140.0
TTM Earnings per share	Rs	6.4	8.7
Diluted earnings per share	Rs	6.4	8.7
Price to Cash Flow	x	49.1	37.1
TTM P/E ratio	x	73.4	49.3
Price / Book Value ratio	x	7.1	5.3
Market Cap	Rs m	295,382	240,884
Dividends per share (Unadj.)	Rs	2.3	2.7

Ratio Analysis for KANSAI NEROLAC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.5x during FY23, from 2.4x 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 improved and stood at 22.9x during FY23, from 17.7x 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 10.3% during FY23, from 8.3% 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 improved and stood at 14.6% during FY23, from 12.2% 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 7.9% during FY23, from 6.5% 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	2.4	2.5
Debtors’ Days	Days	6	6
Interest coverage	x	17.7	22.9
Debt to equity ratio	x	0.0	0.0
Return on assets	%	6.5	7.9
Return on equity	%	8.3	10.3
Return on capital employed	%	12.2	14.6

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 413.2 to Rs 428.6, registering a gain of Rs 15.4 or around 3.7%.

Overall, the S&P BSE SENSEX is up 13.5% over the year.

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