PRECISION WIRES 2020-21 Annual Report Analysis

Wed, 31 Mar

PRECISION WIRES 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.

PRECISION WIRES Income Statement Analysis

• Operating income during the year rose 11.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 5.8% in FY21 as against 6.0% in FY20.
• Depreciation charges increased by 0.2% and finance costs decreased by 20.5% YoY, respectively.
• Other income grew by 21.4% YoY.
• Net profit for the year grew by 23.5% YoY.
• Net profit margins during the year grew from 2.6% in FY20 to 2.9% in FY21.

PRECISION WIRES Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	12,067	13,482	11.7%
Other income	Rs m	41	50	21.4%
Total Revenues	Rs m	12,108	13,532	11.8%
Gross profit	Rs m	727	778	7.0%
Depreciation	Rs m	161	161	0.2%
Interest	Rs m	190	151	-20.5%
Profit before tax	Rs m	417	515	23.7%
Tax	Rs m	99	122	24.2%
Profit after tax	Rs m	318	393	23.5%
Gross profit margin	%	6.0	5.8
Effective tax rate	%	23.6	23.7
Net profit margin	%	2.6	2.9

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PRECISION WIRES Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 5 billion as compared to Rs 2 billion in FY20, thereby witnessing an increase of 87.7%.
• Long-term debt down at Rs 75 million as compared to Rs 120 million during FY20, a fall of 37.6%.
• Current assets rose 59% and stood at Rs 7 billion, while fixed assets fell 6% and stood at Rs 1 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 8 billion as against Rs 5 billion during FY20, thereby witnessing a growth of 44%.

PRECISION WIRES Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	2,828	3,161	11.8
Current Liabilities	Rs m	2,433	4,567	87.7
Long-term Debt	Rs m	120	75	-37.6
Total Liabilities	Rs m	5,440	7,859	44.5
Current assets	Rs m	4,228	6,717	58.9
Fixed Assets	Rs m	1,212	1,141	-5.8
Total Assets	Rs m	5,440	7,859	44.5

PRECISION WIRES Cash Flow Statement Analysis

• PRECISION WIRES's cash flow from operating activities (CFO) during FY21 stood at Rs 614 million, an improvement of 27.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -354 million, an improvement of 173.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -309 million, an improvement of 1% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -49 million from the Rs 42 million net cash flows seen during FY20.

PRECISION WIRES 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	483	614	27.0%
Cash Flow from Investing Activities	Rs m	-130	-354	-
Cash Flow from Financing Activities	Rs m	-311	-309	-
Net Cash Flow	Rs m	42	-49	-

Current Valuations for PRECISION WIRES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 17.0, an improvement from the EPS of Rs 13.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 193.6, stands at 56.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.1 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at 5.9 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	521.7	582.9
TTM Earnings per share	Rs	13.8	17.0
Diluted earnings per share	Rs	2.8	3.4
Price to Cash Flow	x	16.1	5.9
TTM P/E ratio	x	24.2	56.9
Price / Book Value ratio	x	1.1	1.0
Market Cap	Rs m	3,230	3,261
Dividends per share (Unadj.)	Rs	0.5	1.0

Ratio Analysis for PRECISION WIRES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.5x during FY21, from 1.7x 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 4.4x during FY21, from 3.2x 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 improved and stood at 12.4% during FY21, from 11.3% 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 improved and stood at 20.6% during FY21, from 20.6% 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 6.9% during FY21, from 9.3% 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	1.7	1.5
Debtors’ Days	Days	813	1,192
Interest coverage	x	3.2	4.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.3	6.9
Return on equity	%	11.3	12.4
Return on capital employed	%	20.6	20.6

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

PRECISION WIRES Share Price Performance

Over the last one year, PRECISION WIRES share price has moved up from Rs 66.7 to Rs 193.6, registering a gain of Rs 126.9 or around 190.2%.

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

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

Read: Latest Annual Report Analysis of PRECISION WIRES