SRF 2022-23 Annual Report Analysis

Thu, 8 Jun

SRF 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.

SRF Income Statement Analysis

• Operating income during the year fell 2.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 2.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 26.5% in FY23 as against 25.0% in FY22.
• Depreciation charges decreased by 9.4% and finance costs increased by 51.7% YoY, respectively.
• Other income declined by 8.2% YoY.
• Net profit for the year grew by 7.1% YoY.
• Net profit margins during the year grew from 15.2% in FY22 to 16.8% in FY23.

SRF Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	124,337	120,738	-2.9%
Other income	Rs m	1,155	1,061	-8.2%
Total Revenues	Rs m	125,492	121,799	-2.9%
Gross profit	Rs m	31,032	31,941	2.9%
Depreciation	Rs m	5,172	4,684	-9.4%
Interest	Rs m	1,159	1,758	51.7%
Profit before tax	Rs m	25,856	26,559	2.7%
Tax	Rs m	6,966	6,325	-9.2%
Profit after tax	Rs m	18,889	20,234	7.1%
Gross profit margin	%	25.0	26.5
Effective tax rate	%	26.9	23.8
Net profit margin	%	15.2	16.8

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SRF Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 35 billion as compared to Rs 44 billion in FY22, thereby witnessing an decrease of -21.5%.
• Long-term debt down at Rs 17 billion as compared to Rs 18 billion during FY22, a fall of 1.5%.
• Current assets fell 5% and stood at Rs 50 billion, while fixed assets rose 0% and stood at Rs 105 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 156 billion as against Rs 158 billion during FY22, thereby witnessing a fall of 1%.

SRF Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	85,621	92,419	7.9
Current Liabilities	Rs m	44,403	34,850	-21.5
Long-term Debt	Rs m	17,533	17,265	-1.5
Total Liabilities	Rs m	157,650	155,514	-1.4
Current assets	Rs m	52,513	50,035	-4.7
Fixed Assets	Rs m	105,107	105,479	0.4
Total Assets	Rs m	157,650	155,514	-1.4

SRF Cash Flow Statement Analysis

• SRF's cash flow from operating activities (CFO) during FY23 stood at Rs 28 billion, an improvement of 32.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -23 billion, an improvement of 46.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 2 billion from the Rs 3 billion net cash flows seen during FY22.

SRF 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	21,057	27,881	32.4%
Cash Flow from Investing Activities	Rs m	-15,877	-23,282	-
Cash Flow from Financing Activities	Rs m	-2,073	-2,523	-
Net Cash Flow	Rs m	3,122	2,076	-33.5%

Current Valuations for SRF

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 68.3, an improvement from the EPS of Rs 63.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,557.0, stands at 35.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.2 times, while the price to sales ratio stands at 6.3 times.
• The company's price to cash flow (P/CF) ratio stood at 28.9 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	419.5	407.3
TTM Earnings per share	Rs	63.7	68.3
Diluted earnings per share	Rs	63.7	68.3
Price to Cash Flow	x	33.0	28.9
TTM P/E ratio	x	42.0	35.1
Price / Book Value ratio	x	25.2	7.8
Market Cap	Rs m	2,160,161	721,328
Dividends per share (Unadj.)	Rs	16.8	7.2

Ratio Analysis for SRF

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.4x during FY23, from 1.2x 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 deteriorated and stood at 16.1x during FY23, from 23.3x 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 declined and down at 21.9% during FY23, from 22.1% 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 declined and down at 25.8% during FY23, from 26.2% 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 14.1% during FY23, from 12.7% 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	1.2	1.4
Debtors’ Days	Days	5	4
Interest coverage	x	23.3	16.1
Debt to equity ratio	x	0.2	0.2
Return on assets	%	12.7	14.1
Return on equity	%	22.1	21.9
Return on capital employed	%	26.2	25.8

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 2,260.7 to Rs 2,557.0, registering a gain of Rs 296.3 or around 13.1%.

Overall, the S&P BSE SENSEX is up 13.7% over the year.

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