SRF 2020-21 Annual Report Analysis

Wed, 31 Mar

SRF 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.

SRF Income Statement Analysis

• Operating income during the year rose 13.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 54.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 25.3% in FY21 as against 18.5% in FY20.
• Depreciation charges increased by 16.6% and finance costs decreased by 33.3% YoY, respectively.
• Other income declined by 74.5% YoY.
• Net profit for the year grew by 17.5% YoY.
• Net profit margins during the year grew from 13.7% in FY20 to 14.3% in FY21.

SRF Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	74,187	84,023	13.3%
Other income	Rs m	2,846	726	-74.5%
Total Revenues	Rs m	77,033	84,749	10.0%
Gross profit	Rs m	13,752	21,244	54.5%
Depreciation	Rs m	3,886	4,531	16.6%
Interest	Rs m	2,007	1,340	-33.3%
Profit before tax	Rs m	10,706	16,099	50.4%
Tax	Rs m	515	4,120	700.6%
Profit after tax	Rs m	10,191	11,979	17.5%
Gross profit margin	%	18.5	25.3
Effective tax rate	%	4.8	25.6
Net profit margin	%	13.7	14.3

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SRF Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 36 billion as compared to Rs 33 billion in FY20, thereby witnessing an increase of 8.0%.
• Long-term debt down at Rs 20 billion as compared to Rs 23 billion during FY20, a fall of 15.0%.
• Current assets rose 36% and stood at Rs 39 billion, while fixed assets rose 13% and stood at Rs 90 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 129 billion as against Rs 109 billion during FY20, thereby witnessing a growth of 19%.

SRF Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	49,318	68,539	39.0
Current Liabilities	Rs m	33,079	35,711	8.0
Long-term Debt	Rs m	23,116	19,650	-15.0
Total Liabilities	Rs m	108,625	129,113	18.9
Current assets	Rs m	29,062	39,389	35.5
Fixed Assets	Rs m	79,563	89,724	12.8
Total Assets	Rs m	108,625	129,113	18.9

SRF Cash Flow Statement Analysis

• SRF's cash flow from operating activities (CFO) during FY21 stood at Rs 18 billion, an improvement of 35.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -15 billion, an improvement of 27.1% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 219 million from the Rs -731 million net cash flows seen during FY20.

SRF 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	13,044	17,717	35.8%
Cash Flow from Investing Activities	Rs m	-11,803	-14,997	-
Cash Flow from Financing Activities	Rs m	-1,990	-2,511	-
Net Cash Flow	Rs m	-731	219	-

Current Valuations for SRF

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 202.2, an improvement from the EPS of Rs 177.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 5,406.5, stands at 133.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 23.4 times, while the price to sales ratio stands at 3.8 times.
• The company's price to cash flow (P/CF) ratio stood at 15.5 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	1,290.6	1,418.1
TTM Earnings per share	Rs	177.3	202.2
Diluted earnings per share	Rs	34.4	40.4
Price to Cash Flow	x	58.5	15.5
TTM P/E ratio	x	89.0	133.7
Price / Book Value ratio	x	3.8	3.7
Market Cap	Rs m	185,659	255,963
Dividends per share (Unadj.)	Rs	14.0	24.0

Ratio Analysis for SRF

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.1x during FY21, from 0.9x 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 13.0x during FY21, from 6.3x 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 17.5% during FY21, from 20.7% 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 19.8% during FY21, from 17.6% 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 10.3% during FY21, from 11.2% 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	0.9	1.1
Debtors’ Days	Days	4	6
Interest coverage	x	6.3	13.0
Debt to equity ratio	x	0.5	0.3
Return on assets	%	11.2	10.3
Return on equity	%	20.7	17.5
Return on capital employed	%	17.6	19.8

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

SRF Share Price Performance

Over the last one year, SRF share price has moved up from Rs 2,779.3 to Rs 5,406.5, registering a gain of Rs 2,627.2 or around 94.5%.

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

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

Read: Latest Annual Report Analysis of SRF