M&M 2022-23 Annual Report Analysis

Tue, 4 Jul

M&M 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.

M&M Income Statement Analysis

• Operating income during the year rose 34.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 36.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.0% in FY23 as against 18.7% in FY22.
• Depreciation charges increased by 24.2% and finance costs increased by 16.2% YoY, respectively.
• Other income grew by 16.3% YoY.
• Net profit for the year grew by 56.8% YoY.
• Net profit margins during the year grew from 8.0% in FY22 to 9.4% in FY23.

M&M Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	901,706	1,212,686	34.5%
Other income	Rs m	10,376	12,065	16.3%
Total Revenues	Rs m	912,082	1,224,750	34.3%
Gross profit	Rs m	168,497	230,403	36.7%
Depreciation	Rs m	35,075	43,568	24.2%
Interest	Rs m	50,181	58,297	16.2%
Profit before tax	Rs m	93,618	140,602	50.2%
Tax	Rs m	21,088	26,858	27.4%
Profit after tax	Rs m	72,530	113,745	56.8%
Gross profit margin	%	18.7	19.0
Effective tax rate	%	22.5	19.1
Net profit margin	%	8.0	9.4

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M&M Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 706 billion as compared to Rs 563 billion in FY22, thereby witnessing an increase of 25.4%.
• Long-term debt stood at Rs 550 billion as compared to Rs 486 billion during FY22, a growth of 13.2%.
• Current assets rose 21% and stood at Rs 913 billion, while fixed assets rose 16% and stood at Rs 1,130 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 2,043 billion as against Rs 1,724 billion during FY22, thereby witnessing a growth of 18%.

M&M Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	468,992	561,055	19.6
Current Liabilities	Rs m	562,883	705,794	25.4
Long-term Debt	Rs m	486,251	550,274	13.2
Total Liabilities	Rs m	1,723,885	2,042,763	18.5
Current assets	Rs m	751,480	912,688	21.5
Fixed Assets	Rs m	972,405	1,129,509	16.2
Total Assets	Rs m	1,723,885	2,042,763	18.5

M&M Cash Flow Statement Analysis

• M&M's cash flow from operating activities (CFO) during FY23 stood at Rs -71 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -85 billion, an improvement of 165.0% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 159 billion, an improvement of 371% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 58 million from the Rs 1 billion net cash flows seen during FY22.

M&M 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	92,476	-70,740	-
Cash Flow from Investing Activities	Rs m	-32,258	-85,473	-
Cash Flow from Financing Activities	Rs m	-58,826	159,461	-
Net Cash Flow	Rs m	1,130	58	-94.8%

Current Valuations for M&M

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 102.1, an improvement from the EPS of Rs 65.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,468.4, stands at 18.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.3 times, while the price to sales ratio stands at 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at 7.8 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	810.8	1,088.9
TTM Earnings per share	Rs	65.2	102.1
Diluted earnings per share	Rs	58.3	91.5
Price to Cash Flow	x	9.3	7.8
TTM P/E ratio	x	18.6	18.5
Price / Book Value ratio	x	2.0	2.2
Market Cap	Rs m	917,452	1,227,490
Dividends per share (Unadj.)	Rs	11.6	16.3

Ratio Analysis for M&M

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY23, from 1.3x 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 improved and stood at 3.4x during FY23, from 2.9x 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 20.3% during FY23, from 15.5% 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 17.9% during FY23, from 15.1% 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 8.4% during FY23, from 7.1% 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	1.3	1.3
Debtors’ Days	Days	3	2
Interest coverage	x	2.9	3.4
Debt to equity ratio	x	1.0	1.0
Return on assets	%	7.1	8.4
Return on equity	%	15.5	20.3
Return on capital employed	%	15.1	17.9

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 1,091.1 to Rs 1,468.4, registering a gain of Rs 377.3 or around 34.6%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 34,767.3 (down 0.4%). Over the last one year it has moved up from 26,748.4 to 34,767.3, a gain of 8,019 points (up 30.0%).

Overall, the S&P BSE SENSEX is up 23.0% over the year.

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