VARDHMAN TEXTILES 2020-21 Annual Report Analysis

Wed, 31 Mar

VARDHMAN TEXTILES 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.

VARDHMAN TEXTILES Income Statement Analysis

• Operating income during the year fell 8.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 13.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.3% in FY21 as against 13.9% in FY20.
• Depreciation charges increased by 9.2% and finance costs decreased by 16.2% YoY, respectively.
• Other income grew by 15.5% YoY.
• Net profit for the year declined by 30.6% YoY.
• Net profit margins during the year declined from 8.6% in FY20 to 6.5% in FY21.

VARDHMAN TEXTILES Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	67,350	61,399	-8.8%
Other income	Rs m	1,745	2,016	15.5%
Total Revenues	Rs m	69,095	63,414	-8.2%
Gross profit	Rs m	9,374	8,138	-13.2%
Depreciation	Rs m	3,332	3,638	9.2%
Interest	Rs m	1,353	1,133	-16.2%
Profit before tax	Rs m	6,433	5,383	-16.3%
Tax	Rs m	645	1,364	111.5%
Profit after tax	Rs m	5,788	4,018	-30.6%
Gross profit margin	%	13.9	13.3
Effective tax rate	%	10.0	25.3
Net profit margin	%	8.6	6.5

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VARDHMAN TEXTILES Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 14 billion as compared to Rs 16 billion in FY20, thereby witnessing an decrease of -12.6%.
• Long-term debt stood at Rs 13 billion as compared to Rs 13 billion during FY20, a growth of 2.4%.
• Current assets rose 7% and stood at Rs 52 billion, while fixed assets fell 1% and stood at Rs 44 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 96 billion as against Rs 94 billion during FY20, thereby witnessing a growth of 3%.

VARDHMAN TEXTILES Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	60,332	64,559	7.0
Current Liabilities	Rs m	16,355	14,286	-12.6
Long-term Debt	Rs m	12,661	12,966	2.4
Total Liabilities	Rs m	93,535	96,270	2.9
Current assets	Rs m	48,825	52,022	6.5
Fixed Assets	Rs m	44,710	44,248	-1.0
Total Assets	Rs m	93,535	96,270	2.9

VARDHMAN TEXTILES Cash Flow Statement Analysis

• VARDHMAN TEXTILES's cash flow from operating activities (CFO) during FY21 stood at Rs 2 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -1 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -2 billion, an improvement of 41% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -1 billion from the Rs 2 billion net cash flows seen during FY20.

VARDHMAN TEXTILES 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	8,494	1,684	-80.2%
Cash Flow from Investing Activities	Rs m	-3,790	-1,159	-
Cash Flow from Financing Activities	Rs m	-2,956	-1,747	-
Net Cash Flow	Rs m	1,748	-1,222	-

Current Valuations for VARDHMAN TEXTILES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 71.0, an decline from the EPS of Rs 102.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,300.1, stands at 93.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.8 times, while the price to sales ratio stands at 1.2 times.
• The company's price to cash flow (P/CF) ratio stood at 7.1 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	1,191.6	1,085.5
TTM Earnings per share	Rs	102.4	71.0
Diluted earnings per share	Rs	20.0	13.9
Price to Cash Flow	x	19.8	7.1
TTM P/E ratio	x	31.2	93.5
Price / Book Value ratio	x	0.8	0.8
Market Cap	Rs m	49,568	54,247
Dividends per share (Unadj.)	Rs	0.0	3.5

Ratio Analysis for VARDHMAN TEXTILES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.6x during FY21, from 3.0x 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 deteriorated and stood at 5.8x during FY21, from 5.8x 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 6.2% during FY21, from 9.6% 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 8.4% during FY21, from 10.7% 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 5.4% during FY21, from 7.6% 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	3.0	3.6
Debtors’ Days	Days	4	6
Interest coverage	x	5.8	5.8
Debt to equity ratio	x	0.2	0.2
Return on assets	%	7.6	5.4
Return on equity	%	9.6	6.2
Return on capital employed	%	10.7	8.4

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

VARDHMAN TEXTILES Share Price Performance

Over the last one year, VARDHMAN TEXTILES share price has moved up from Rs 625.7 to Rs 1,300.1, registering a gain of Rs 674.5 or around 107.8%.

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

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

Read: Latest Annual Report Analysis of VARDHMAN TEXTILES