NALCO 2019-20 Annual Report Analysis

Tue, 31 Mar

NALCO has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

NALCO Income Statement Analysis

• Operating income during the year fell 26.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 83.1% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 5.8% in FY20 as against 25.1% in FY19.
• Depreciation charges increased by 11.3% and finance costs increased by 141.2% YoY, respectively.
• Other income declined by 17.4% YoY.
• Net profit for the year declined by 92.0% YoY.
• Net profit margins during the year declined from 15.1% in FY19 to 1.6% in FY20.

NALCO Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	114,993	84,718	-26.3%
Other income	Rs m	3,315	2,739	-17.4%
Total Revenues	Rs m	118,309	87,458	-26.1%
Gross profit	Rs m	28,882	4,879	-83.1%
Depreciation	Rs m	4,761	5,298	11.3%
Interest	Rs m	24	57	141.2%
Profit before tax	Rs m	27,412	2,262	-91.7%
Tax	Rs m	10,075	880	-91.3%
Profit after tax	Rs m	17,337	1,382	-92.0%
Gross profit margin	%	25.1	5.8
Effective tax rate	%	36.8	38.9
Net profit margin	%	15.1	1.6

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NALCO Balance Sheet Analysis

• The company's current liabilities during FY20 down at Rs 27 billion as compared to Rs 29 billion in FY19, thereby witnessing an decrease of -6.4%.
• Current assets fell 19% and stood at Rs 46 billion, while fixed assets rose 5% and stood at Rs 100 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 145 billion as against Rs 151 billion during FY19, thereby witnessing a fall of 4%.

NALCO Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	104,849	99,865	-4.8
Current Liabilities	Rs m	29,051	27,200	-6.4
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	151,474	145,481	-4.0
Current assets	Rs m	56,007	45,578	-18.6
Fixed Assets	Rs m	95,467	99,903	4.6
Total Assets	Rs m	151,474	145,481	-4.0

NALCO Cash Flow Statement Analysis

• NALCO's cash flow from operating activities (CFO) during FY20 stood at Rs -3 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs 9 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -7 billion, an improvement of 61% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -2 billion from the Rs 1 billion net cash flows seen during FY19.

NALCO Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	24,089	-3,486	-
Cash Flow from Investing Activities	Rs m	-5,319	8,727	-
Cash Flow from Financing Activities	Rs m	-17,308	-6,773	-
Net Cash Flow	Rs m	1,463	-1,531	-

Current Valuations for NALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 0.7, an decline from the EPS of Rs 9.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 29.2, stands at 38.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.5 times, while the price to sales ratio stands at 0.6 times.
• The company's price to cash flow (P/CF) ratio stood at 11.5 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	61.6	45.4
TTM Earnings per share	Rs	9.3	0.7
Diluted earnings per share	Rs	9.4	0.8
Price to Cash Flow	x	4.6	11.5
TTM P/E ratio	x	5.9	38.7
Price / Book Value ratio	x	1.2	0.8
Market Cap	Rs m	127,235	76,957
Dividends per share (Unadj.)	Rs	5.8	2.8

Ratio Analysis for NALCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.7x during FY20, from 1.9x during FY19. 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 40.4x during FY20, from 1,152.8x during FY19. 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 1.4% during FY20, from 16.5% during FY20. 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 2.3% during FY20, from 26.2% during FY19. 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 1.0% during FY20, from 11.5% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	1.9	1.7
Debtors’ Days	Days	1	1
Interest coverage	x	1,152.8	40.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	11.5	1.0
Return on equity	%	16.5	1.4
Return on capital employed	%	26.2	2.3

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

NALCO Share Price Performance

Over the last one year, NALCO share price has moved down from Rs 55.4 to Rs 29.2, registering a loss of Rs 26.3 or around 47.4%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 5,713.3 (up 5.4%). Over the last one year it has moved down from 11,355.1 to 5,713.3, a loss of 5,642 points (down 49.7%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Read: Latest Annual Report Analysis of NALCO