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ITC 2020-21 Annual Report Analysis
Wed, 31 Mar

ITC 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.

ITC Income Statement Analysis

  • Operating income during the year fell 4.3% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 11.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 37.5% in FY21 as against 40.4% in FY20.
  • Depreciation charges increased by 0.0% and finance costs decreased by 28.8% YoY, respectively.
  • Other income grew by 1.3% YoY.
  • Net profit for the year declined by 14.1% YoY.
  • Net profit margins during the year declined from 32.9% in FY20 to 29.5% in FY21.

ITC Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 474,146 453,904 -4.3%
Other income Rs m 26,006 26,337 1.3%
Total Revenues Rs m 500,152 480,242 -4.0%
Gross profit Rs m 191,521 170,149 -11.2%
Depreciation Rs m 16,449 16,456 0.0%
Interest Rs m 814 580 -28.8%
Profit before tax Rs m 200,264 179,451 -10.4%
Tax Rs m 44,418 45,553 2.6%
Profit after tax Rs m 155,846 133,898 -14.1%
Gross profit margin % 40.4 37.5
Effective tax rate % 22.2 25.4
Net profit margin % 32.9 29.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Read Now: We're Bullish on 2 Non-Nifty Stocks

ITC Balance Sheet Analysis

  • The company's current liabilities during FY21 stood at Rs 107 billion as compared to Rs 96 billion in FY20, thereby witnessing an increase of 11.8%.
  • Long-term debt down at Rs 56 million as compared to Rs 59 million during FY20, a fall of 5.4%.
  • Current assets fell 11% and stood at Rs 350 billion, while fixed assets rose 3% and stood at Rs 388 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 738 billion as against Rs 773 billion during FY20, thereby witnessing a fall of 5%.

ITC Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 632,511 586,408 -7.3
 
Current Liabilities Rs m 95,598 106,897 11.8
Long-term Debt Rs m 59 56 -5.4
Total Liabilities Rs m 773,108 737,608 -4.6
 
Current assets Rs m 395,054 349,920 -11.4
Fixed Assets Rs m 378,054 387,688 2.5
Total Assets Rs m 773,108 737,608 -4.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



ITC Cash Flow Statement Analysis

  • ITC's cash flow from operating activities (CFO) during FY21 stood at Rs 125 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs 57 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -186 billion on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs -4 billion from the Rs 3 billion net cash flows seen during FY20.

ITC 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 146,897 125,271 -14.7%
Cash Flow from Investing Activities Rs m -61,740 56,829 -
Cash Flow from Financing Activities Rs m -81,815 -186,338 -
Net Cash Flow Rs m 3,342 -3,669 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for ITC

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.9, an decline from the EPS of Rs 12.7 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 218.5, stands at 20.1 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 4.6 times, while the price to sales ratio stands at 5.9 times.
  • The company's price to cash flow (P/CF) ratio stood at 16.2 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 38.6 36.9
TTM Earnings per share Rs 12.7 10.9
Diluted earnings per share Rs 12.6 10.9
Price to Cash Flow x 12.3 16.2
TTM P/E ratio x 14.0 20.1
Price / Book Value ratio x 4.3 4.2
Market Cap Rs m 2,735,021 2,438,690
Dividends per share (Unadj.) Rs 10.2 10.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for ITC

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 3.3x during FY21, from 4.1x 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 improved and stood at 310.6x during FY21, from 247.1x 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 22.8% during FY21, from 24.6% 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 30.7% during FY21, from 31.8% 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 18.2% during FY21, from 20.3% 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 4.1 3.3
Debtors’ Days Days 2 2
Interest coverage x 247.1 310.6
Debt to equity ratio x 0.0 0.0
Return on assets % 20.3 18.2
Return on equity % 24.6 22.8
Return on capital employed % 31.8 30.7
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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

ITC Share Price Performance

Over the last one year, ITC share price has moved up from Rs 172.0 to Rs 218.5, registering a gain of Rs 46.5 or around 27.0%.

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

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

Annual Report FAQs

What is the current share price of ITC?

ITC currently trades at Rs 428.6 per share. You can check out the latest share price performance of ITC here...

What was the revenue of ITC in FY21? How does it compare to earlier years?

The revenues of ITC stood at Rs 480,242 m in FY21, which was down -4.0% compared to Rs 500,152 m reported in FY20.

ITC's revenue has grown from Rs 286,102 m in FY17 to Rs 480,242 m in FY21.

Over the past 5 years, the revenue of ITC has grown at a CAGR of 13.8%.

What was the net profit of ITC in FY21? How does it compare to earlier years?

The net profit of ITC stood at Rs 133,898 m in FY21, which was down -14.1% compared to Rs 155,846 m reported in FY20.

This compares to a net profit of Rs 128,242 m in FY19 and a net profit of Rs 114,851 m in FY18.

Over the past 5 years, ITC net profit has grown at a CAGR of 6.3%.

What does the cash flow statement of ITC reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of ITC reveals:

  • Cash flow from operations decreased in FY21 and stood at Rs 125,271 m as compared to Rs 146,897 m in FY20.
  • Cash flow from investments increased in FY21 and stood at Rs 56,829 m as compared to Rs -61,740 m in FY20.
  • Cash flow from financial activity decreased in FY21 and stood at Rs -186,338 m as compared to Rs -81,815 m in FY20.

Here's the cash flow statement of ITC for the past 5 years.

(Rs m)FY17FY18FY19FY20FY21
From Operations106,273131,694125,834146,897125,271
From Investments-32,509-71,139-55,457-61,74056,829
From Financial Activity-73,010-62,211-68,686-81,815-186,338
Net Cashflow754-1,6561,6913,342-3,669

What does the Key Ratio analysis of ITC reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of ITC reveals:

  • Operating profit margins witnessed a fall and stood at 37.5% in FY21 as against 40.4% in FY20.
  • Net profit margins declined from 32.9% in FY20 to 29.5% in FY21.
  • Debt to Equity ratio for FY21 stood at 0.0 as compared to 0.0 in FY20.

Here's the ratio/financial analysis of ITC for the past 5 years.

 FY17FY18FY19FY20FY21
Operating Profit Margin (%)57.643.139.340.437.5
Net Profit Margin (%)39.029.327.432.929.5
Debt to Equity Ratio (x)0.00.00.00.00.0

Read: Latest Annual Report Analysis of ITC

 

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