ITC 2022-23 Annual Report Analysis

Mon, 17 Jul

ITC 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.

ITC Income Statement Analysis

• Operating income during the year rose 16.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 25.1% YoY during the fiscal. Operating profit margins witnessed a fall and down at 39.5% in FY23 as against 36.8% in FY22.
• Depreciation charges increased by 4.4% and finance costs increased by 29.6% YoY, respectively.
• Other income grew by 4.7% YoY.
• Net profit for the year grew by 25.6% YoY.
• Net profit margins during the year grew from 27.6% in FY22 to 29.8% in FY23.

ITC Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	561,312	653,555	16.4%
Other income	Rs m	18,922	19,819	4.7%
Total Revenues	Rs m	580,235	673,374	16.1%
Gross profit	Rs m	206,406	258,200	25.1%
Depreciation	Rs m	17,324	18,090	4.4%
Interest	Rs m	600	778	29.6%
Profit before tax	Rs m	207,405	259,151	24.9%
Tax	Rs m	52,373	64,384	22.9%
Profit after tax	Rs m	155,031	194,767	25.6%
Gross profit margin	%	36.8	39.5
Effective tax rate	%	25.3	24.8
Net profit margin	%	27.6	29.8

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ITC Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 137 billion as compared to Rs 122 billion in FY22, thereby witnessing an increase of 13.0%.
• Long-term debt down at Rs 35 million as compared to Rs 49 million during FY22, a fall of 28.0%.
• Current assets rose 16% and stood at Rs 397 billion, while fixed assets rose 7% and stood at Rs 462 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 858 billion as against Rs 772 billion during FY22, thereby witnessing a growth of 11%.

ITC Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	611,392	684,138	11.9
Current Liabilities	Rs m	121,637	137,394	13.0
Long-term Debt	Rs m	49	35	-28.0
Total Liabilities	Rs m	771,960	858,310	11.2
Current assets	Rs m	342,325	396,709	15.9
Fixed Assets	Rs m	429,636	461,601	7.4
Total Assets	Rs m	771,960	858,310	11.2

ITC Cash Flow Statement Analysis

• ITC's cash flow from operating activities (CFO) during FY23 stood at Rs 189 billion, an improvement of 19.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -57 billion, an improvement of 156.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -130 billion, an improvement of 4% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 1 billion from the Rs -435 million net cash flows seen during FY22.

ITC 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	157,755	188,776	19.7%
Cash Flow from Investing Activities	Rs m	-22,385	-57,323	-
Cash Flow from Financing Activities	Rs m	-135,805	-130,060	-
Net Cash Flow	Rs m	-435	1,392	-

Current Valuations for ITC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.7, an improvement from the EPS of Rs 12.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 472.8, stands at 30.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.6 times, while the price to sales ratio stands at 9.0 times.
• The company's price to cash flow (P/CF) ratio stood at 18.8 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	45.5	52.6
TTM Earnings per share	Rs	12.6	15.7
Diluted earnings per share	Rs	12.5	15.6
Price to Cash Flow	x	18.1	18.8
TTM P/E ratio	x	20.2	30.3
Price / Book Value ratio	x	4.7	5.8
Market Cap	Rs m	2,861,460	3,994,365
Dividends per share (Unadj.)	Rs	11.5	15.5

Ratio Analysis for ITC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.9x during FY23, from 2.8x 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 deteriorated and stood at 334.2x during FY23, from 346.7x 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 28.5% during FY23, from 25.4% 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 38.0% during FY23, from 34.0% 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 22.8% during FY23, from 20.2% 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	2.8	2.9
Debtors’ Days	Days	2	2
Interest coverage	x	346.7	334.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	20.2	22.8
Return on equity	%	25.4	28.5
Return on capital employed	%	34.0	38.0

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 293.5 to Rs 472.8, registering a gain of Rs 179.3 or around 61.1%.

Overall, the S&P BSE SENSEX is up 24.4% over the year.

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