INDOSTAR CAPITAL 2022-23 Annual Report Analysis

Fri, 31 Mar

INDOSTAR CAPITAL has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

INDOSTAR CAPITAL Income Statement Analysis

• Interest income during the year rose 1.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 7.5% YoY during the same period.
• Operating expenses declined by 43.3% YoY during the year.
• The company's net interest income (NII) decreased by 4.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 7.6% in FY23 as against 7.5% in FY22.
• Other income increased by 3557.8% YoY during the year.
• Net profit for the year increased by 130.6% YoY.
• Net profit margins during the year increased to 19.2% in FY23 from -63.3% in FY22.

INDOSTAR CAPITAL Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	11,627	11,743	1.0%
Other Income	Rs m	146	5,332	3557.8%
Interest Expense	Rs m	5,395	5,803	7.5%
Net Interest Income	Rs m	6,232	5,941	-4.7%
Operating Expense	Rs m	14,987	8,491	-43.3%
Pre-provision Operating Profit	Rs m	-8,610	2,782	132.3%
Provisions & Contingencies	Rs m	509	420	-17.5%
Profit before tax	Rs m	-8,964	2,386	126.6%
Tax	Rs m	-1,598	135	108.4%
Profit after tax	Rs m	-7,365	2,251	130.6%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	7.5	7.6
Net profit margin	%	-63.3	19.2

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INDOSTAR CAPITAL Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 0 m as compared to Rs 0 m in FY22, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 65.2 bn as compared to Rs 77.1 bn during FY22, a fall of 15.5%.
• Cost of deposits for INDOSTAR CAPITAL rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 13.2 bn during the year from Rs 5.9 bn in FY22.
• Borrowing stood at Rs 16.6 bn, a fall of 12.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 88.1 bn as against Rs 93.4 bn during FY22, thereby witnessing a fall of 5.8%.

INDOSTAR CAPITAL Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	28,583	30,908	8.1%
Advances	Rs m	77,069	65,157	-15.5%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	5,929	13,156	121.9%
Borrowings	Rs m	18,812	16,554	-12.0%
Total Assets	Rs m	93,448	88,058	-5.8%

Current Valuations for INDOSTAR CAPITAL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 16.5, an improvement from the EPS of Rs -54.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 104.2, stands at 10.9 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.5 times, while the price to income ratio stands at 2.1 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	85.4	86.3
Earnings per share (Unadj.)	Rs	-54.1	16.5
Diluted earnings per share	Rs	-54.1	16.5
Avg P/E ratio	Rs	-5.7	10.9
Avg P/ABV ratio	Rs	1.0	0.5
Avg Market Cap	Rs	42,106	24,569
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for INDOSTAR CAPITAL

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio deteriorated and stood at 6,515,670.0x during FY23, from 7,706,938.6x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio decreased and stood at 0.54x during FY23, from 0.66x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): INDOSTAR CAPITAL's capital adequacy ratio (CAR) was at 31.5% as on 31 March 2023 as compared to 25.8% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 7.3% during FY23, from -25.8% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 2.56% during FY23, from -7.88% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 9.14% during FY23, from -3.78% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. INDOSTAR CAPITAL's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of INDOSTAR CAPITAL was 3.8% in financial year 2023. This compared with 7.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	7,706,938.6	6,515,670.0
Debt to Equity Ratio	x	0.7	0.5
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	25.8	31.5
Return on Equity	%	-25.8	7.3
Return on Assets	%	-7.9	2.6
Return on Capital Employed	%	-3.8	9.1
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	7.3	3.8
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

INDOSTAR CAPITAL Share Price Performance

Over the last one year, INDOSTAR CAPITAL share price has moved down from Rs 211.4 to Rs 104.2, registering a loss of Rs 107.3 or around 50.7%.

Overall, the S&P BSE SENSEX is up 1.8% over the year.

(To know more, you can check out historical annual results for INDOSTAR CAPITAL here and quarterly results for INDOSTAR CAPITAL here)