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MSTC 2022-23 Annual Report Analysis

Thu, 31 Aug

MSTC 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.

MSTC Income Statement Analysis

• Operating income during the year fell 17.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1959.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 26.8% in FY23 as against 1.1% in FY22.
• Depreciation charges increased by 4.9% and finance costs decreased by 94.5% YoY, respectively.
• Other income declined by 36.0% YoY.
• Net profit for the year grew by 21.5% YoY.
• Net profit margins during the year grew from 22.7% in FY22 to 33.6% in FY23.

MSTC Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	8,761	7,210	-17.7%
Other income	Rs m	2,472	1,582	-36.0%
Total Revenues	Rs m	11,233	8,792	-21.7%
Gross profit	Rs m	94	1,930	1,959.9%
Depreciation	Rs m	208	218	4.9%
Interest	Rs m	28	2	-94.5%
Profit before tax	Rs m	2,329	3,292	41.3%
Tax	Rs m	338	872	158.0%
Profit after tax	Rs m	1,991	2,420	21.5%
Gross profit margin	%	1.1	26.8
Effective tax rate	%	14.5	26.5
Net profit margin	%	22.7	33.6

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MSTC Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 18 billion as compared to Rs 12 billion in FY22, thereby witnessing an increase of 44.2%.
• Current assets rose 52% and stood at Rs 22 billion, while fixed assets fell 1% and stood at Rs 8 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 30 billion as against Rs 23 billion during FY22, thereby witnessing a growth of 33%.

MSTC Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	6,540	7,865	20.3
Current Liabilities	Rs m	12,463	17,967	44.2
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	22,748	30,269	33.1
Current assets	Rs m	14,660	22,262	51.9
Fixed Assets	Rs m	8,061	7,981	-1.0
Total Assets	Rs m	22,748	30,269	33.1

MSTC Cash Flow Statement Analysis

• MSTC's cash flow from operating activities (CFO) during FY23 stood at Rs 9 billion, an improvement of 421.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -6 billion, an improvement of 728.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 2 billion from the Rs 2 million net cash flows seen during FY22.

MSTC 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	1,701	8,865	421.1%
Cash Flow from Investing Activities	Rs m	-716	-5,932	-
Cash Flow from Financing Activities	Rs m	-983	-1,186	-
Net Cash Flow	Rs m	2	1,746	76,820.3%

Current Valuations for MSTC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 34.4, an improvement from the EPS of Rs 28.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 394.9, stands at 11.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.5 times, while the price to sales ratio stands at 3.9 times.
• The company's price to cash flow (P/CF) ratio stood at 8.1 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	124.5	102.4
TTM Earnings per share	Rs	28.3	34.4
Diluted earnings per share	Rs	28.3	34.4
Price to Cash Flow	x	9.8	8.1
TTM P/E ratio	x	10.8	11.5
Price / Book Value ratio	x	4.2	2.7
Market Cap	Rs m	27,609	21,484
Dividends per share (Unadj.)	Rs	12.9	15.0

Ratio Analysis for MSTC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.2x during FY23, from 1.2x 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 2,111.1x during FY23, from 83.4x 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 30.8% during FY23, from 30.4% 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 41.9% during FY23, from 36.0% 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 declined and down at 8.0% during FY23, from 8.9% 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	1.2	1.2
Debtors’ Days	Days	2,284	2,345
Interest coverage	x	83.4	2,111.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.9	8.0
Return on equity	%	30.4	30.8
Return on capital employed	%	36.0	41.9

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

MSTC Share Price Performance

Over the last one year, MSTC share price has moved up from Rs 274.7 to Rs 394.9, registering a gain of Rs 120.3 or around 43.8%.

Overall, the S&P BSE SENSEX is up 12.3% over the year.

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