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NIRLON 2022-23 Annual Report Analysis

Wed, 7 Feb

NIRLON 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.

NIRLON Income Statement Analysis

• Operating income during the year rose 49.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 54.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 80.0% in FY23 as against 77.4% in FY22.
• Depreciation charges increased by 36.1% and finance costs increased by 263.3% YoY, respectively.
• Other income grew by 6.6% YoY.
• Net profit for the year grew by 42.5% YoY.
• Net profit margins during the year declined from 28.9% in FY22 to 27.6% in FY23.

NIRLON Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	3,839	5,726	49.1%
Other income	Rs m	28	30	6.6%
Total Revenues	Rs m	3,867	5,756	48.8%
Gross profit	Rs m	2,974	4,580	54.0%
Depreciation	Rs m	755	1,028	36.1%
Interest	Rs m	346	1,257	263.3%
Profit before tax	Rs m	1,901	2,325	22.3%
Tax	Rs m	793	746	-5.8%
Profit after tax	Rs m	1,108	1,579	42.5%
Gross profit margin	%	77.4	80.0
Effective tax rate	%	41.7	32.1
Net profit margin	%	28.9	27.6

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NIRLON Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 2 billion as compared to Rs 3 billion in FY22, thereby witnessing an decrease of -36.1%.
• Long-term debt stood at Rs 11 billion as compared to Rs 11 billion during FY22, a growth of 4.7%.
• Current assets fell 64% and stood at Rs 608 million, while fixed assets rose 3% and stood at Rs 22 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 23 billion as against Rs 23 billion during FY22, thereby witnessing a fall of 2%.

NIRLON Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	4,780	4,018	-15.9
Current Liabilities	Rs m	3,488	2,230	-36.1
Long-term Debt	Rs m	10,939	11,450	4.7
Total Liabilities	Rs m	23,345	22,828	-2.2
Current assets	Rs m	1,668	608	-63.6
Fixed Assets	Rs m	21,678	22,221	2.5
Total Assets	Rs m	23,345	22,828	-2.2

NIRLON Cash Flow Statement Analysis

• NIRLON's cash flow from operating activities (CFO) during FY23 stood at Rs 4 billion, an improvement of 15.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -905 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -4 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -790 million from the Rs 946 million net cash flows seen during FY22.

NIRLON 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	3,402	3,923	15.3%
Cash Flow from Investing Activities	Rs m	-1,594	-905	-
Cash Flow from Financing Activities	Rs m	-862	-3,809	-
Net Cash Flow	Rs m	946	-790	-

Current Valuations for NIRLON

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 17.5, an improvement from the EPS of Rs 12.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 375.7, stands at 21.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.4 times, while the price to sales ratio stands at 5.9 times.
• The company's price to cash flow (P/CF) ratio stood at 12.4 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	42.6	63.5
TTM Earnings per share	Rs	12.3	17.5
Diluted earnings per share	Rs	12.3	17.5
Price to Cash Flow	x	19.8	12.4
TTM P/E ratio	x	33.4	21.4
Price / Book Value ratio	x	6.7	8.1
Market Cap	Rs m	31,870	32,402
Dividends per share (Unadj.)	Rs	26.0	26.0

Ratio Analysis for NIRLON

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.3x during FY23, from 0.5x 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 deteriorated and stood at 2.9x during FY23, from 6.5x 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 39.3% during FY23, from 23.2% 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 23.2% during FY23, from 14.3% 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 12.4% during FY23, from 6.2% 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	0.5	0.3
Debtors’ Days	Days	30	18
Interest coverage	x	6.5	2.9
Debt to equity ratio	x	2.3	2.8
Return on assets	%	6.2	12.4
Return on equity	%	23.2	39.3
Return on capital employed	%	14.3	23.2

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 down from Rs 410.3 to Rs 375.7, registering a loss of Rs 34.6 or around 8.4%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 34,369.7 (up 1.2%). Over the last one year it has moved up from 27,506.0 to 34,369.7, a gain of 6,864 points (up 25.0%).

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)