NELCO 2020-21 Annual Report Analysis

Wed, 31 Mar

NELCO 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.

NELCO Income Statement Analysis

• Operating income during the year rose 2.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 11.1% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 19.7% in FY21 as against 22.8% in FY20.
• Depreciation charges increased by 11.4% and finance costs decreased by 27.4% YoY, respectively.
• Other income declined by 3.4% YoY.
• Net profit for the year declined by 14.0% YoY.
• Net profit margins during the year declined from 6.5% in FY20 to 5.5% in FY21.

NELCO Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	2,199	2,261	2.8%
Other income	Rs m	32	31	-3.4%
Total Revenues	Rs m	2,231	2,292	2.7%
Gross profit	Rs m	502	446	-11.1%
Depreciation	Rs m	200	223	11.4%
Interest	Rs m	131	95	-27.4%
Profit before tax	Rs m	203	159	-21.6%
Tax	Rs m	59	35	-40.1%
Profit after tax	Rs m	144	124	-14.0%
Gross profit margin	%	22.8	19.7
Effective tax rate	%	29.0	22.2
Net profit margin	%	6.5	5.5

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NELCO Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 1 billion as compared to Rs 2 billion in FY20, thereby witnessing an decrease of -24.6%.
• Long-term debt down at Rs 151 million as compared to Rs 295 million during FY20, a fall of 48.6%.
• Current assets fell 15% and stood at Rs 994 million, while fixed assets fell 6% and stood at Rs 2 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 3 billion as against Rs 3 billion during FY20, thereby witnessing a fall of 10%.

NELCO Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	659	758	15.0
Current Liabilities	Rs m	1,749	1,318	-24.6
Long-term Debt	Rs m	295	151	-48.6
Total Liabilities	Rs m	2,828	2,553	-9.7
Current assets	Rs m	1,169	994	-15.0
Fixed Assets	Rs m	1,659	1,559	-6.0
Total Assets	Rs m	2,828	2,553	-9.7

NELCO Cash Flow Statement Analysis

• NELCO's cash flow from operating activities (CFO) during FY21 stood at Rs 540 million, an improvement of 62.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -76 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -470 million on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -6 million from the Rs -24 million net cash flows seen during FY20.

NELCO 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	332	540	62.7%
Cash Flow from Investing Activities	Rs m	-401	-76	-
Cash Flow from Financing Activities	Rs m	45	-470	-
Net Cash Flow	Rs m	-24	-6	-

Current Valuations for NELCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 5.4, an decline from the EPS of Rs 6.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 188.6, stands at 34.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.7 times, while the price to sales ratio stands at 1.9 times.
• The company's price to cash flow (P/CF) ratio stood at 12.2 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	96.4	99.1
TTM Earnings per share	Rs	6.3	5.4
Diluted earnings per share	Rs	6.3	5.4
Price to Cash Flow	x	8.9	12.2
TTM P/E ratio	x	21.3	34.8
Price / Book Value ratio	x	7.8	5.6
Market Cap	Rs m	5,145	4,241
Dividends per share (Unadj.)	Rs	1.2	1.2

Ratio Analysis for NELCO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.8x during FY21, from 0.7x 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 improved and stood at 2.7x during FY21, from 2.5x 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 16.3% during FY21, from 21.8% 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 27.9% during FY21, from 35.0% 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 8.6% during FY21, from 9.7% 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	0.7	0.8
Debtors’ Days	Days	1,166	938
Interest coverage	x	2.5	2.7
Debt to equity ratio	x	0.4	0.2
Return on assets	%	9.7	8.6
Return on equity	%	21.8	16.3
Return on capital employed	%	35.0	27.9

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

NELCO Share Price Performance

Over the last one year, NELCO share price has moved up from Rs 134.5 to Rs 188.6, registering a gain of Rs 54.1 or around 40.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 21,095.8 (down 0.4%). Over the last one year it has moved up from 10,979.5 to 21,095.8, a gain of 10,116 points (up 92.1%).

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

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

Read: Latest Annual Report Analysis of NELCO