THERMAX 2020-21 Annual Report Analysis

Wed, 31 Mar

THERMAX 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.

THERMAX Income Statement Analysis

• Operating income during the year fell 16.6% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 24.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 6.3% in FY21 as against 7.0% in FY20.
• Depreciation charges decreased by 1.8% and finance costs increased by 37.4% YoY, respectively.
• Other income grew by 2.1% YoY.
• Net profit for the year declined by 2.8% YoY.
• Net profit margins during the year grew from 3.7% in FY20 to 4.3% in FY21.

THERMAX Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	57,483	47,913	-16.6%
Other income	Rs m	1,055	1,077	2.1%
Total Revenues	Rs m	58,537	48,990	-16.3%
Gross profit	Rs m	4,007	3,027	-24.5%
Depreciation	Rs m	1,166	1,146	-1.8%
Interest	Rs m	150	206	37.4%
Profit before tax	Rs m	3,745	2,752	-26.5%
Tax	Rs m	1,621	686	-57.7%
Profit after tax	Rs m	2,125	2,066	-2.8%
Gross profit margin	%	7.0	6.3
Effective tax rate	%	43.3	24.9
Net profit margin	%	3.7	4.3

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THERMAX Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 31 billion as compared to Rs 28 billion in FY20, thereby witnessing an increase of 10.2%.
• Long-term debt down at Rs 222 million as compared to Rs 334 million during FY20, a fall of 33.6%.
• Current assets rose 12% and stood at Rs 45 billion, while fixed assets rose 3% and stood at Rs 19 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 63 billion as against Rs 58 billion during FY20, thereby witnessing a growth of 9%.

THERMAX Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	30,279	32,514	7.4
Current Liabilities	Rs m	27,868	30,707	10.2
Long-term Debt	Rs m	334	222	-33.6
Total Liabilities	Rs m	58,005	63,458	9.4
Current assets	Rs m	39,773	44,665	12.3
Fixed Assets	Rs m	18,233	18,794	3.1
Total Assets	Rs m	58,005	63,458	9.4

THERMAX Cash Flow Statement Analysis

• THERMAX's cash flow from operating activities (CFO) during FY21 stood at Rs 8 billion, an improvement of 136.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -6 billion, an improvement of 277.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs 772 million, an improvement of 133% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 2 billion from the Rs -469 million net cash flows seen during FY20.

THERMAX 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	3,256	7,695	136.3%
Cash Flow from Investing Activities	Rs m	-1,685	-6,357	-
Cash Flow from Financing Activities	Rs m	-2,325	772	-
Net Cash Flow	Rs m	-469	2,198	-

Current Valuations for THERMAX

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 18.3, an decline from the EPS of Rs 18.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,346.1, stands at 77.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.9 times, while the price to sales ratio stands at 3.2 times.
• The company's price to cash flow (P/CF) ratio stood at 37.7 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	510.5	425.5
TTM Earnings per share	Rs	18.9	18.3
Diluted earnings per share	Rs	17.8	17.3
Price to Cash Flow	x	26.8	37.7
TTM P/E ratio	x	41.5	77.6
Price / Book Value ratio	x	3.4	3.7
Market Cap	Rs m	102,705	121,024
Dividends per share (Unadj.)	Rs	7.0	7.0

Ratio Analysis for THERMAX

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.5x during FY21, from 1.4x 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 deteriorated and stood at 14.3x during FY21, from 25.9x 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 6.4% during FY21, from 7.0% 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 9.0% during FY21, from 12.7% 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 3.6% during FY21, from 3.9% 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	1.4	1.5
Debtors’ Days	Days	9	9
Interest coverage	x	25.9	14.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	3.9	3.6
Return on equity	%	7.0	6.4
Return on capital employed	%	12.7	9.0

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

THERMAX Share Price Performance

Over the last one year, THERMAX share price has moved up from Rs 739.5 to Rs 1,346.1, registering a gain of Rs 606.6 or around 82.0%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 21,095.8 (down 0.4%). Over the last one year it has moved up from 10,979.5 to 21,095.8, a gain of 10,116 points (up 92.1%).

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

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

Read: Latest Annual Report Analysis of THERMAX