NELCO 2022-23 Annual Report Analysis

Tue, 30 May

NELCO 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.

NELCO Income Statement Analysis

• Operating income during the year rose 20.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 22.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.6% in FY23 as against 19.3% in FY22.
• Depreciation charges increased by 12.7% and finance costs increased by 15.3% YoY, respectively.
• Other income declined by 45.3% YoY.
• Net profit for the year grew by 23.4% YoY.
• Net profit margins during the year grew from 6.2% in FY22 to 6.3% in FY23.

NELCO Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	2,601	3,133	20.5%
Other income	Rs m	52	28	-45.3%
Total Revenues	Rs m	2,652	3,162	19.2%
Gross profit	Rs m	502	615	22.5%
Depreciation	Rs m	246	278	12.7%
Interest	Rs m	75	87	15.3%
Profit before tax	Rs m	232	278	20.2%
Tax	Rs m	71	80	12.7%
Profit after tax	Rs m	161	199	23.4%
Gross profit margin	%	19.3	19.6
Effective tax rate	%	30.5	28.6
Net profit margin	%	6.2	6.3

Download Now: 7 Unstoppable Growth Engines of India's $10 Trillion Bull Run...

NELCO Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 1 billion as compared to Rs 1 billion in FY22, thereby witnessing an decrease of -10.6%.
• Long-term debt down at Rs 186 million as compared to Rs 188 million during FY22, a fall of 0.7%.
• Current assets rose 16% and stood at Rs 1 billion, while fixed assets fell 14% and stood at Rs 1 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 3 billion as against Rs 3 billion during FY22, thereby witnessing a growth of 0%.

NELCO Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	891	1,046	17.4
Current Liabilities	Rs m	1,332	1,191	-10.6
Long-term Debt	Rs m	188	186	-0.7
Total Liabilities	Rs m	2,624	2,630	0.2
Current assets	Rs m	1,236	1,432	15.9
Fixed Assets	Rs m	1,388	1,198	-13.7
Total Assets	Rs m	2,624	2,630	0.2

NELCO Cash Flow Statement Analysis

• NELCO's cash flow from operating activities (CFO) during FY23 stood at Rs 581 million, an improvement of 14.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -249 million, an improvement of 39.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -326 million on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 5 million from the Rs 138 million net cash flows seen during FY22.

NELCO 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	506	581	14.9%
Cash Flow from Investing Activities	Rs m	-179	-249	-
Cash Flow from Financing Activities	Rs m	-189	-326	-
Net Cash Flow	Rs m	138	5	-96.3%

Current Valuations for NELCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.7, an improvement from the EPS of Rs 7.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 617.8, stands at 71.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 13.5 times, while the price to sales ratio stands at 4.5 times.
• The company's price to cash flow (P/CF) ratio stood at 37.8 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	114.0	137.3
TTM Earnings per share	Rs	7.0	8.7
Diluted earnings per share	Rs	7.0	8.7
Price to Cash Flow	x	40.1	37.8
TTM P/E ratio	x	101.5	71.0
Price / Book Value ratio	x	14.7	17.2
Market Cap	Rs m	13,090	17,991
Dividends per share (Unadj.)	Rs	1.8	2.0

Ratio Analysis for NELCO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.2x during FY23, from 0.9x 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 4.2x during FY23, from 4.1x 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 19.0% during FY23, from 18.1% 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 29.6% during FY23, from 28.5% 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 10.8% during FY23, from 9.0% 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	0.9	1.2
Debtors’ Days	Days	1,093	964
Interest coverage	x	4.1	4.2
Debt to equity ratio	x	0.2	0.2
Return on assets	%	9.0	10.8
Return on equity	%	18.1	19.0
Return on capital employed	%	28.5	29.6

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 589.3 to Rs 617.8, registering a gain of Rs 28.6 or around 4.8%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 37,220.2 (up 0.5%). Over the last one year it has moved up from 27,006.2 to 37,220.2, a gain of 10,214 points (up 37.8%).

Overall, the S&P BSE SENSEX is up 16.0% over the year.

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