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STERLING TOOLS 2020-21 Annual Report Analysis
Wed, 31 Mar

STERLING TOOLS 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.

STERLING TOOLS Income Statement Analysis

  • Operating income during the year fell 3.0% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 2.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 16.8% in FY21 as against 16.7% in FY20.
  • Depreciation charges increased by 8.9% and finance costs increased by 21.4% YoY, respectively.
  • Other income declined by 14.0% YoY.
  • Net profit for the year declined by 22.8% YoY.
  • Net profit margins during the year declined from 8.5% in FY20 to 6.8% in FY21.

STERLING TOOLS Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 3,642 3,531 -3.0%
Other income Rs m 62 54 -14.0%
Total Revenues Rs m 3,705 3,585 -3.2%
Gross profit Rs m 608 595 -2.3%
Depreciation Rs m 242 264 8.9%
Interest Rs m 63 76 21.4%
Profit before tax Rs m 366 308 -15.7%
Tax Rs m 55 68 24.1%
Profit after tax Rs m 311 240 -22.8%
Gross profit margin % 16.7 16.8
Effective tax rate % 15.0 22.1
Net profit margin % 8.5 6.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Read Now: We're Bullish on 2 Non-Nifty Stocks

STERLING TOOLS Balance Sheet Analysis

  • The company's current liabilities during FY21 stood at Rs 1 billion as compared to Rs 549 million in FY20, thereby witnessing an increase of 100.0%.
  • Long-term debt down at Rs 377 million as compared to Rs 481 million during FY20, a fall of 21.5%.
  • Current assets rose 53% and stood at Rs 2 billion, while fixed assets fell 3% and stood at Rs 3 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 5 billion as against Rs 4 billion during FY20, thereby witnessing a growth of 16%.

STERLING TOOLS Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 3,065 3,315 8.2
 
Current Liabilities Rs m 549 1,098 100.0
Long-term Debt Rs m 481 377 -21.5
Total Liabilities Rs m 4,443 5,163 16.2
 
Current assets Rs m 1,526 2,329 52.6
Fixed Assets Rs m 2,917 2,834 -2.9
Total Assets Rs m 4,443 5,163 16.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



STERLING TOOLS Cash Flow Statement Analysis

  • STERLING TOOLS's cash flow from operating activities (CFO) during FY21 stood at Rs 158 million on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -493 million on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs 229 million, an improvement of 154% on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs -106 million from the Rs 118 million net cash flows seen during FY20.

STERLING TOOLS 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 526 158 -69.9%
Cash Flow from Investing Activities Rs m 16 -493 -
Cash Flow from Financing Activities Rs m -424 229 -
Net Cash Flow Rs m 118 -106 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for STERLING TOOLS

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 6.7, an decline from the EPS of Rs 8.6 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 195.0, stands at 29.2 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.1 times, while the price to sales ratio stands at 2.0 times.
  • The company's price to cash flow (P/CF) ratio stood at 12.1 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 101.1 98.0
TTM Earnings per share Rs 8.6 6.7
Diluted earnings per share Rs 8.6 6.7
Price to Cash Flow x 8.5 12.1
TTM P/E ratio x 15.1 29.2
Price / Book Value ratio x 2.6 1.8
Market Cap Rs m 8,006 6,093
Dividends per share (Unadj.) Rs 2.0 1.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for STERLING TOOLS

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 2.1x during FY21, from 2.8x 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 deteriorated and stood at 5.1x during FY21, from 6.8x 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 7.2% during FY21, from 10.1% 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 10.4% during FY21, from 12.1% 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 6.1% during FY21, from 8.4% 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 2.8 2.1
Debtors’ Days Days 281 430
Interest coverage x 6.8 5.1
Debt to equity ratio x 0.2 0.1
Return on assets % 8.4 6.1
Return on equity % 10.1 7.2
Return on capital employed % 12.1 10.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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

STERLING TOOLS Share Price Performance

Over the last one year, STERLING TOOLS share price has moved up from Rs 130.1 to Rs 195.0, registering a gain of Rs 65.0 or around 49.9%.

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

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

Annual Report FAQs

What is the current share price of STERLING TOOLS?

STERLING TOOLS currently trades at Rs 306.2 per share. You can check out the latest share price performance of STERLING TOOLS here...

What was the revenue of STERLING TOOLS in FY21? How does it compare to earlier years?

The revenues of STERLING TOOLS stood at Rs 3,585 m in FY21, which was down -3.2% compared to Rs 3,705 m reported in FY20.

STERLING TOOLS' revenue has grown from Rs 3,335 m in FY17 to Rs 3,585 m in FY21.

Over the past 5 years, the revenue of STERLING TOOLS has grown at a CAGR of 1.8%.

What was the net profit of STERLING TOOLS in FY21? How does it compare to earlier years?

The net profit of STERLING TOOLS stood at Rs 240 m in FY21, which was down -22.8% compared to Rs 311 m reported in FY20.

This compares to a net profit of Rs 450 m in FY19 and a net profit of Rs 488 m in FY18.

Over the past 5 years, STERLING TOOLS net profit has grown at a CAGR of -11.6%.

What does the cash flow statement of STERLING TOOLS reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of STERLING TOOLS reveals:

  • Cash flow from operations decreased in FY21 and stood at Rs 158 m as compared to Rs 526 m in FY20.
  • Cash flow from investments decreased in FY21 and stood at Rs -493 m as compared to Rs 16 m in FY20.
  • Cash flow from financial activity increased in FY21 and stood at Rs 229 m as compared to Rs -424 m in FY20.

Here's the cash flow statement of STERLING TOOLS for the past 5 years.

(Rs m)FY17FY18FY19FY20FY21
From Operations587470427526158
From Investments-246-746-91916-493
From Financial Activity-423263520-424229
Net Cashflow-81-1328118-106

What does the Key Ratio analysis of STERLING TOOLS reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of STERLING TOOLS reveals:

  • Operating profit margins witnessed a fall and down at 16.8% in FY21 as against 16.7% in FY20.
  • Net profit margins declined from 8.5% in FY20 to 6.8% in FY21.
  • Debt to Equity ratio for FY21 stood at 0.1 as compared to 0.2 in FY20.

Here's the ratio/financial analysis of STERLING TOOLS for the past 5 years.

 FY17FY18FY19FY20FY21
Operating Profit Margin (%)23.220.516.816.716.8
Net Profit Margin (%)12.011.18.88.56.8
Debt to Equity Ratio (x)0.20.10.20.20.1

Read: Latest Annual Report Analysis of STERLING TOOLS

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