STERLING TOOLS 2022-23 Annual Report Analysis

Mon, 19 Feb

STERLING TOOLS 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.

STERLING TOOLS Income Statement Analysis

• Operating income during the year rose 51.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 53.1% YoY during the fiscal. Operating profit margins witnessed a fall and down at 13.1% in FY23 as against 12.9% in FY22.
• Depreciation charges increased by 16.0% and finance costs increased by 28.7% YoY, respectively.
• Other income declined by 4.2% YoY.
• Net profit for the year grew by 87.5% YoY.
• Net profit margins during the year grew from 5.0% in FY22 to 6.2% in FY23.

STERLING TOOLS Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	5,096	7,720	51.5%
Other income	Rs m	30	29	-4.2%
Total Revenues	Rs m	5,126	7,749	51.2%
Gross profit	Rs m	659	1,010	53.1%
Depreciation	Rs m	273	317	16.0%
Interest	Rs m	69	88	28.7%
Profit before tax	Rs m	348	633	82.1%
Tax	Rs m	92	154	67.3%
Profit after tax	Rs m	255	479	87.5%
Gross profit margin	%	12.9	13.1
Effective tax rate	%	26.6	24.4
Net profit margin	%	5.0	6.2

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STERLING TOOLS Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 2 billion as compared to Rs 1 billion in FY22, thereby witnessing an increase of 41.4%.
• Long-term debt down at Rs 366 million as compared to Rs 429 million during FY22, a fall of 14.6%.
• Current assets rose 35% and stood at Rs 3 billion, while fixed assets rose 1% and stood at Rs 3 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 7 billion as against Rs 6 billion during FY22, thereby witnessing a growth of 16%.

STERLING TOOLS Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	3,558	4,004	12.5
Current Liabilities	Rs m	1,317	1,863	41.4
Long-term Debt	Rs m	429	366	-14.6
Total Liabilities	Rs m	5,653	6,556	16.0
Current assets	Rs m	2,552	3,432	34.5
Fixed Assets	Rs m	3,102	3,124	0.7
Total Assets	Rs m	5,653	6,556	16.0

STERLING TOOLS Cash Flow Statement Analysis

• STERLING TOOLS's cash flow from operating activities (CFO) during FY23 stood at Rs 629 million, an improvement of 153.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -534 million, an improvement of 36.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -57 million on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 38 million from the Rs -43 million net cash flows seen during FY22.

STERLING TOOLS 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	248	629	153.3%
Cash Flow from Investing Activities	Rs m	-392	-534	-
Cash Flow from Financing Activities	Rs m	101	-57	-
Net Cash Flow	Rs m	-43	38	-

Current Valuations for STERLING TOOLS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 13.3, an improvement from the EPS of Rs 7.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 402.0, stands at 30.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.6 times, while the price to sales ratio stands at 1.9 times.
• The company's price to cash flow (P/CF) ratio stood at 12.0 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	141.5	214.3
TTM Earnings per share	Rs	7.1	13.3
Diluted earnings per share	Rs	7.1	13.3
Price to Cash Flow	x	9.3	12.0
TTM P/E ratio	x	18.7	30.2
Price / Book Value ratio	x	2.0	2.4
Market Cap	Rs m	6,983	9,582
Dividends per share (Unadj.)	Rs	1.0	2.0

Ratio Analysis for STERLING TOOLS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during FY23, from 1.9x 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 8.2x during FY23, from 6.1x 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 12.0% during FY23, from 7.2% 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 16.5% during FY23, from 10.4% 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 8.7% during FY23, from 5.7% 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	1.9	1.8
Debtors’ Days	Days	449	385
Interest coverage	x	6.1	8.2
Debt to equity ratio	x	0.1	0.1
Return on assets	%	5.7	8.7
Return on equity	%	7.2	12.0
Return on capital employed	%	10.4	16.5

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 135.8 to Rs 402.0, registering a gain of Rs 266.2 or around 196.0%.

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

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