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STARTECK FINANCE 2021-22 Annual Report Analysis

Thu, 31 Mar

STARTECK FINANCE has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during the year 2021-22.

STARTECK FINANCE Income Statement Analysis

• Interest income during the year fell 30.7% on a year-on-year (YoY) basis.
• Interest expenses were down by 54.1% YoY during the same period.
• Operating expenses declined by 51.8% YoY during the year.
• The company's net interest income (NII) increased by 38.0% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 18.7% in FY22 as against 15.5% in FY21.
• Other income declined by 98.4% YoY during the year.
• Net profit for the year declined by 72.9% YoY.
• Net profit margins during the year declined to 35.9% in FY22 from 91.8% in FY21.

STARTECK FINANCE Income Statement – 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Interest Income	Rs m	410	284	-30.7%
Other Income	Rs m	351	6	-98.4%
Interest Expense	Rs m	306	140	-54.1%
Net Interest Income	Rs m	104	143	38.0%
Operating Expense	Rs m	59	29	-51.8%
Pre-provision Operating Profit	Rs m	396	120	-69.6%
Provisions & Contingencies	Rs m	102	156	53.8%
Profit before tax	Rs m	396	120	-69.6%
Tax	Rs m	20	18	-5.5%
Profit after tax	Rs m	376	102	-72.9%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	15.5	18.7
Net profit margin	%	91.8	35.9

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STARTECK FINANCE Balance Sheet Analysis

• The company's deposits during FY22 stood at Rs 0 m as compared to Rs 0 m in FY21, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY21, a rise of 0.0%.
• Cost of deposits for STARTECK FINANCE rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 768 m during the year from Rs 670 m in FY21.
• Borrowing stood at Rs 435 m, a growth of 732.0% as compared to previous year.
• Overall, the total assets and liabilities for FY22 stood at Rs 2.7 bn as against Rs 8.1 bn during FY21, thereby witnessing a fall of 67.1%.

STARTECK FINANCE Balance Sheet – as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	1,466	1,610	9.8%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	670	768	14.6%
Borrowings	Rs m	52	435	732.0%
Total Assets	Rs m	8,141	2,677	-67.1%

Current Valuations for STARTECK FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.3, an improvement from the EPS of Rs 38.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 121.0, stands at 10.5 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.7 times, while the price to income ratio stands at 3.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Income per share (Unadj.)	Rs	41.4	28.6
Earnings per share (Unadj.)	Rs	38.0	10.3
Diluted earnings per share	Rs	38.0	10.3
Avg P/E ratio	Rs	2.0	10.5
Avg P/ABV ratio	Rs	0.5	0.7
Avg Market Cap	Rs	748	1,070
Dividends per share (Unadj.)	Rs	0.25	0.25

Ratio Analysis for STARTECK FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY22, from 0.0x during FY21. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.27x during FY22, from 0.04x during FY21. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): STARTECK FINANCE's capital adequacy ratio (CAR) was at 0.0% as on 31 March 2022 as compared to 0.0% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company deteriorated and stood at 6.3% during FY22, from 25.7% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company deteriorated and stood at 3.81% during FY22, from 4.62% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company deteriorated and stood at 5.02% during FY22, from 14.32% during FY21. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. STARTECK FINANCE's gross NPA ratio stood at 0.0% as of 31 March 2022 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of STARTECK FINANCE was 0.0% in financial year 2022. This compared with 0.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.0	0.3
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	0.0	0.0
Return on Equity	%	25.7	6.3
Return on Assets	%	4.6	3.8
Return on Capital Employed	%	14.3	5.0
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.0	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

STARTECK FINANCE Share Price Performance

Over the last one year, STARTECK FINANCE share price has moved up from Rs 78.6 to Rs 121.0, registering a gain of Rs 42.5 or around 54.0%.

Overall, the S&P BSE SENSEX is up 16.8% over the year.

(To know more, you can check out historical annual results for STARTECK FINANCE here and quarterly results for STARTECK FINANCE here)