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NIRLON 2021-22 Annual Report Analysis

Mon, 21 Nov

NIRLON has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

NIRLON Income Statement Analysis

• Operating income during the year rose 21.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 25.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 77.4% in FY22 as against 74.8% in FY21.
• Depreciation charges increased by 55.0% and finance costs increased by 146.5% YoY, respectively.
• Other income grew by 12.7% YoY.
• Net profit for the year declined by 13.0% YoY.
• Net profit margins during the year declined from 40.2% in FY21 to 28.9% in FY22.

NIRLON Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	3,169	3,839	21.2%
Other income	Rs m	25	28	12.7%
Total Revenues	Rs m	3,194	3,867	21.1%
Gross profit	Rs m	2,372	2,974	25.4%
Depreciation	Rs m	487	755	55.0%
Interest	Rs m	140	346	146.5%
Profit before tax	Rs m	1,769	1,901	7.4%
Tax	Rs m	495	793	60.1%
Profit after tax	Rs m	1,274	1,108	-13.0%
Gross profit margin	%	74.8	77.4
Effective tax rate	%	28.0	41.7
Net profit margin	%	40.2	28.9

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NIRLON Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 3 billion as compared to Rs 1 billion in FY21, thereby witnessing an increase of 168.6%.
• Long-term debt stood at Rs 11 billion as compared to Rs 10 billion during FY21, a growth of 11.8%.
• Current assets rose 670% and stood at Rs 2 billion, while fixed assets rose 9% and stood at Rs 22 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 23 billion as against Rs 20 billion during FY21, thereby witnessing a growth of 16%.

NIRLON Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	5,744	4,780	-16.8
Current Liabilities	Rs m	1,299	3,488	168.6
Long-term Debt	Rs m	9,784	10,939	11.8
Total Liabilities	Rs m	20,119	23,345	16.0
Current assets	Rs m	217	1,668	670.2
Fixed Assets	Rs m	19,903	21,678	8.9
Total Assets	Rs m	20,119	23,345	16.0

NIRLON Cash Flow Statement Analysis

• NIRLON's cash flow from operating activities (CFO) during FY22 stood at Rs 3 billion, an improvement of 62.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -2 billion, an improvement of 33.0% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -862 million, an improvement of 13% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 946 million from the Rs -100 million net cash flows seen during FY21.

NIRLON Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	2,094	3,402	62.5%
Cash Flow from Investing Activities	Rs m	-1,198	-1,594	-
Cash Flow from Financing Activities	Rs m	-996	-862	-
Net Cash Flow	Rs m	-100	946	-

Current Valuations for NIRLON

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.3, an decline from the EPS of Rs 14.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 372.0, stands at 31.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.0 times, while the price to sales ratio stands at 8.7 times.
• The company's price to cash flow (P/CF) ratio stood at 17.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	35.2	42.6
TTM Earnings per share	Rs	14.1	12.3
Diluted earnings per share	Rs	14.1	12.3
Price to Cash Flow	x	14.0	17.1
TTM P/E ratio	x	19.3	31.9
Price / Book Value ratio	x	3.9	6.7
Market Cap	Rs m	22,608	31,870
Dividends per share (Unadj.)	Rs	8.0	26.0

Ratio Analysis for NIRLON

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.5x during FY22, from 0.2x during FY21. 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 6.5x during FY22, from 13.6x during FY21. 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 23.2% during FY22, from 22.2% during FY22. 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 14.3% during FY22, from 12.3% during FY21. 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 6.2% during FY22, from 7.0% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	0.2	0.5
Debtors’ Days	Days	22	30
Interest coverage	x	13.6	6.5
Debt to equity ratio	x	1.7	2.3
Return on assets	%	7.0	6.2
Return on equity	%	22.2	23.2
Return on capital employed	%	12.3	14.3

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

NIRLON Share Price Performance

Over the last one year, NIRLON share price has moved up from Rs 362.9 to Rs 372.0, registering a gain of Rs 9.1 or around 2.5%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 33,331.3 (down 0.1%). Over the last one year it has moved up from 28,487.6 to 33,331.3, a gain of 4,844 points (up 17.0%).

Overall, the S&P BSE SENSEX is up 1.8% over the year.

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

Read: Latest Annual Report Analysis of NIRLON