ITC 2020-21 Annual Report Analysis

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ITC 2020-21 Annual Report Analysis
Mon, 6 Sep

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 31.2% in FY20 to 27.9% 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 % 31.2 27.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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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 209.2, stands at 18.2 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 4.2 times, while the price to sales ratio stands at 5.4 times.
  • The company's price to cash flow (P/CF) ratio stood at 17.1 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 12.7 10.9
Price to Cash Flow x 14.9 17.1
TTM P/E ratio x 18.1 18.2
Price / Book Value ratio x 4.3 4.2
Market Cap Rs m 2,570,920 2,574,395
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 186.7 to Rs 209.2, registering a gain of Rs 22.5 or around 12.1%.

Overall, the S&P BSE SENSEX is up 49.2% over the year.

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

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