THERMAX 2022-23 Annual Report Analysis

Mon, 10 Jul

THERMAX 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.

THERMAX Income Statement Analysis

• Operating income during the year rose 32.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 47.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 7.4% in FY23 as against 6.6% in FY22.
• Depreciation charges increased by 3.2% and finance costs increased by 49.3% YoY, respectively.
• Other income grew by 11.2% YoY.
• Net profit for the year grew by 44.3% YoY.
• Net profit margins during the year grew from 5.1% in FY22 to 5.6% in FY23.

THERMAX Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	61,283	80,898	32.0%
Other income	Rs m	1,441	1,602	11.2%
Total Revenues	Rs m	62,724	82,500	31.5%
Gross profit	Rs m	4,045	5,973	47.7%
Depreciation	Rs m	1,132	1,169	3.2%
Interest	Rs m	252	376	49.3%
Profit before tax	Rs m	4,101	6,031	47.1%
Tax	Rs m	978	1,524	55.8%
Profit after tax	Rs m	3,123	4,507	44.3%
Gross profit margin	%	6.6	7.4
Effective tax rate	%	23.8	25.3
Net profit margin	%	5.1	5.6

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THERMAX Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 44 billion as compared to Rs 38 billion in FY22, thereby witnessing an increase of 17.3%.
• Long-term debt stood at Rs 4 billion as compared to Rs 614 million during FY22, a growth of 587.9%.
• Current assets rose 28% and stood at Rs 61 billion, while fixed assets rose 2% and stood at Rs 26 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 87 billion as against Rs 73 billion during FY22, thereby witnessing a growth of 19%.

THERMAX Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	34,925	38,656	10.7
Current Liabilities	Rs m	37,581	44,092	17.3
Long-term Debt	Rs m	614	4,225	587.9
Total Liabilities	Rs m	73,309	87,300	19.1
Current assets	Rs m	47,378	60,723	28.2
Fixed Assets	Rs m	25,931	26,498	2.2
Total Assets	Rs m	73,309	87,300	19.1

THERMAX Cash Flow Statement Analysis

• THERMAX's cash flow from operating activities (CFO) during FY23 stood at Rs 5 billion, an improvement of 41.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -7 billion, an improvement of 61.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 3 billion, an improvement of 1,794% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 1 billion from the Rs -1 billion net cash flows seen during FY22.

THERMAX 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	3,247	4,596	41.5%
Cash Flow from Investing Activities	Rs m	-4,216	-6,797	-
Cash Flow from Financing Activities	Rs m	-206	3,485	-
Net Cash Flow	Rs m	-1,154	1,443	-

Current Valuations for THERMAX

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 37.8, an improvement from the EPS of Rs 26.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,264.7, stands at 59.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.0 times, while the price to sales ratio stands at 3.3 times.
• The company's price to cash flow (P/CF) ratio stood at 47.3 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	514.3	678.9
TTM Earnings per share	Rs	26.2	37.8
Diluted earnings per share	Rs	26.2	37.8
Price to Cash Flow	x	54.4	47.3
TTM P/E ratio	x	74.2	59.8
Price / Book Value ratio	x	5.9	6.9
Market Cap	Rs m	204,725	268,629
Dividends per share (Unadj.)	Rs	9.0	10.0

Ratio Analysis for THERMAX

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.4x during FY23, from 1.3x 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 17.0x during FY23, from 17.3x 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 improved and stood at 11.7% during FY23, from 8.9% 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 improved and stood at 14.9% during FY23, from 12.2% 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 5.6% during FY23, from 4.6% 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	1.3	1.4
Debtors’ Days	Days	8	8
Interest coverage	x	17.3	17.0
Debt to equity ratio	x	0.0	0.1
Return on assets	%	4.6	5.6
Return on equity	%	8.9	11.7
Return on capital employed	%	12.2	14.9

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 2,087.4 to Rs 2,264.7, registering a gain of Rs 177.3 or around 8.5%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 40,670.4 (down 0.8%). Over the last one year it has moved up from 27,580.5 to 40,670.4, a gain of 13,090 points (up 47.5%).

Overall, the S&P BSE SENSEX is up 22.9% over the year.

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