M&M 2021-22 Annual Report Analysis

Fri, 8 Jul

M&M has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

M&M Income Statement Analysis

• Operating income during the year rose 21.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 20.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 16.6% in FY22 as against 16.8% in FY21.
• Depreciation charges increased by 3.8% and finance costs decreased by 17.8% YoY, respectively.
• Other income declined by 5.5% YoY.
• Net profit for the year grew by 122.5% YoY.
• Net profit margins during the year grew from 3.3% in FY21 to 6.0% in FY22.

M&M Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	742,778	901,706	21.4%
Other income	Rs m	10,985	10,376	-5.5%
Total Revenues	Rs m	753,762	912,082	21.0%
Gross profit	Rs m	124,529	149,939	20.4%
Depreciation	Rs m	33,781	35,075	3.8%
Interest	Rs m	61,022	50,181	-17.8%
Profit before tax	Rs m	40,711	75,060	84.4%
Tax	Rs m	16,458	21,088	28.1%
Profit after tax	Rs m	24,253	53,972	122.5%
Gross profit margin	%	16.8	16.6
Effective tax rate	%	40.4	28.1
Net profit margin	%	3.3	6.0

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M&M Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 563 billion as compared to Rs 514 billion in FY21, thereby witnessing an increase of 9.4%.
• Long-term debt down at Rs 486 billion as compared to Rs 528 billion during FY21, a fall of 7.9%.
• Current assets rose 4% and stood at Rs 751 billion, while fixed assets rose 5% and stood at Rs 972 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 1,724 billion as against Rs 1,647 billion during FY21, thereby witnessing a growth of 5%.

M&M Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	413,270	468,992	13.5
Current Liabilities	Rs m	514,460	562,883	9.4
Long-term Debt	Rs m	527,784	486,251	-7.9
Total Liabilities	Rs m	1,647,452	1,723,885	4.6
Current assets	Rs m	721,379	751,480	4.2
Fixed Assets	Rs m	926,073	972,405	5.0
Total Assets	Rs m	1,647,452	1,723,885	4.6

M&M Cash Flow Statement Analysis

• M&M's cash flow from operating activities (CFO) during FY22 stood at Rs 92 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -32 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -59 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 1 billion from the Rs -14 billion net cash flows seen during FY21.

M&M Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	179,088	92,476	-48.4%
Cash Flow from Investing Activities	Rs m	-184,468	-32,258	-
Cash Flow from Financing Activities	Rs m	4,062	-58,826	-
Net Cash Flow	Rs m	-13,704	1,130	-

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 48.5, an improvement from the EPS of Rs 21.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,131.0, stands at 26.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.0 times, while the price to sales ratio stands at 1.4 times.
• The company's price to cash flow (P/CF) ratio stood at 10.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	669.0	810.8
TTM Earnings per share	Rs	21.8	48.5
Diluted earnings per share	Rs	19.5	43.4
Price to Cash Flow	x	17.0	10.3
TTM P/E ratio	x	55.4	26.1
Price / Book Value ratio	x	1.6	2.0
Market Cap	Rs m	676,005	917,452
Dividends per share (Unadj.)	Rs	8.8	11.6

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY22, from 1.4x during FY21. 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 2.5x during FY22, from 1.7x during FY21. 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 11.5% during FY22, from 5.9% during FY22. 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 13.1% during FY22, from 10.8% during FY21. 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 6.0% during FY22, from 5.2% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	1.4	1.3
Debtors’ Days	Days	3	3
Interest coverage	x	1.7	2.5
Debt to equity ratio	x	1.3	1.0
Return on assets	%	5.2	6.0
Return on equity	%	5.9	11.5
Return on capital employed	%	10.8	13.1

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

M&M Share Price Performance

Over the last one year, M&M share price has moved up from Rs 776.2 to Rs 1,131.0, registering a gain of Rs 354.9 or around 45.7%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 27,791.1 (up 0.1%). Over the last one year it has moved up from 23,307.0 to 27,791.1, a gain of 4,484 points (up 19.2%).

Overall, the S&P BSE SENSEX is up 3.1% over the year.

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

Read: Latest Annual Report Analysis of M&M