SOLAR INDUSTRIES 2020-21 Annual Report Analysis

Wed, 31 Mar

SOLAR INDUSTRIES 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.

SOLAR INDUSTRIES Income Statement Analysis

• Operating income during the year rose 12.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 18.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 20.5% in FY21 as against 19.4% in FY20.
• Depreciation charges increased by 10.6% and finance costs decreased by 17.5% YoY, respectively.
• Other income declined by 47.8% YoY.
• Net profit for the year grew by 3.4% YoY.
• Net profit margins during the year declined from 12.5% in FY20 to 11.5% in FY21.

SOLAR INDUSTRIES Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	22,373	25,156	12.4%
Other income	Rs m	411	214	-47.8%
Total Revenues	Rs m	22,784	25,371	11.4%
Gross profit	Rs m	4,343	5,146	18.5%
Depreciation	Rs m	845	935	10.6%
Interest	Rs m	550	454	-17.5%
Profit before tax	Rs m	3,358	3,971	18.3%
Tax	Rs m	571	1,090	90.8%
Profit after tax	Rs m	2,787	2,881	3.4%
Gross profit margin	%	19.4	20.5
Effective tax rate	%	17.0	27.5
Net profit margin	%	12.5	11.5

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SOLAR INDUSTRIES Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 8 billion as compared to Rs 7 billion in FY20, thereby witnessing an increase of 11.9%.
• Long-term debt stood at Rs 4 billion as compared to Rs 3 billion during FY20, a growth of 71.4%.
• Current assets rose 25% and stood at Rs 12 billion, while fixed assets rose 16% and stood at Rs 17 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 30 billion as against Rs 25 billion during FY20, thereby witnessing a growth of 19%.

SOLAR INDUSTRIES Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	13,801	15,794	14.4
Current Liabilities	Rs m	7,322	8,194	11.9
Long-term Debt	Rs m	2,528	4,332	71.4
Total Liabilities	Rs m	24,808	29,594	19.3
Current assets	Rs m	9,835	12,257	24.6
Fixed Assets	Rs m	14,973	17,338	15.8
Total Assets	Rs m	24,808	29,594	19.3

SOLAR INDUSTRIES Cash Flow Statement Analysis

• SOLAR INDUSTRIES's cash flow from operating activities (CFO) during FY21 stood at Rs 4 billion, an improvement of 9.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -3 billion, an improvement of 18.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -261 million, an improvement of 22% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 774 million from the Rs 316 million net cash flows seen during FY20.

SOLAR INDUSTRIES 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	3,248	3,567	9.8%
Cash Flow from Investing Activities	Rs m	-2,122	-2,507	-
Cash Flow from Financing Activities	Rs m	-336	-261	-
Net Cash Flow	Rs m	316	774	145.2%

Current Valuations for SOLAR INDUSTRIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 31.8, an improvement from the EPS of Rs 30.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,278.1, stands at 40.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.3 times, while the price to sales ratio stands at 4.6 times.
• The company's price to cash flow (P/CF) ratio stood at 26.9 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	247.2	278.0
TTM Earnings per share	Rs	30.8	31.8
Diluted earnings per share	Rs	30.8	31.8
Price to Cash Flow	x	22.7	26.9
TTM P/E ratio	x	29.5	40.1
Price / Book Value ratio	x	7.0	6.5
Market Cap	Rs m	96,012	102,706
Dividends per share (Unadj.)	Rs	6.0	6.0

Ratio Analysis for SOLAR INDUSTRIES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.5x during FY21, from 1.3x 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 9.7x during FY21, from 7.1x 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 18.2% during FY21, from 20.2% 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 22.0% during FY21, from 23.9% 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 11.3% during FY21, from 13.5% 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	1.3	1.5
Debtors’ Days	Days	6	7
Interest coverage	x	7.1	9.7
Debt to equity ratio	x	0.2	0.3
Return on assets	%	13.5	11.3
Return on equity	%	20.2	18.2
Return on capital employed	%	23.9	22.0

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

SOLAR INDUSTRIES Share Price Performance

Over the last one year, SOLAR INDUSTRIES share price has moved up from Rs 909.8 to Rs 1,278.1, registering a gain of Rs 368.4 or around 40.5%.

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

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

Read: Latest Annual Report Analysis of SOLAR INDUSTRIES