HONEYWELL AUTOMATION 2020-21 Annual Report Analysis

Wed, 31 Mar

HONEYWELL AUTOMATION 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.

HONEYWELL AUTOMATION Income Statement Analysis

• Operating income during the year fell 7.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 4.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.8% in FY21 as against 19.1% in FY20.
• Depreciation charges increased by 17.7% and finance costs decreased by 8.3% YoY, respectively.
• Other income declined by 33.7% YoY.
• Net profit for the year declined by 6.4% YoY.
• Net profit margins during the year grew from 14.9% in FY20 to 15.1% in FY21.

HONEYWELL AUTOMATION Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	32,900	30,428	-7.5%
Other income	Rs m	1,099	729	-33.7%
Total Revenues	Rs m	33,999	31,157	-8.4%
Gross profit	Rs m	6,280	6,030	-4.0%
Depreciation	Rs m	414	487	17.7%
Interest	Rs m	100	92	-8.3%
Profit before tax	Rs m	6,866	6,180	-10.0%
Tax	Rs m	1,951	1,580	-19.0%
Profit after tax	Rs m	4,915	4,600	-6.4%
Gross profit margin	%	19.1	19.8
Effective tax rate	%	28.4	25.6
Net profit margin	%	14.9	15.1

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HONEYWELL AUTOMATION Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 13 billion as compared to Rs 12 billion in FY20, thereby witnessing an increase of 9.0%.
• Current assets rose 19% and stood at Rs 35 billion, while fixed assets fell 13% and stood at Rs 4 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 39 billion as against Rs 34 billion during FY20, thereby witnessing a growth of 15%.

HONEYWELL AUTOMATION Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	21,725	25,714	18.4
Current Liabilities	Rs m	11,693	12,748	9.0
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	34,006	38,977	14.6
Current assets	Rs m	29,559	35,090	18.7
Fixed Assets	Rs m	4,447	3,887	-12.6
Total Assets	Rs m	34,006	38,977	14.6

HONEYWELL AUTOMATION Cash Flow Statement Analysis

• HONEYWELL AUTOMATION's cash flow from operating activities (CFO) during FY21 stood at Rs 4 billion, an improvement of 10.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -3 billion, an improvement of 33.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -895 million on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -322 million from the Rs 483 million net cash flows seen during FY20.

HONEYWELL AUTOMATION 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	3,300	3,644	10.4%
Cash Flow from Investing Activities	Rs m	-2,266	-3,031	-
Cash Flow from Financing Activities	Rs m	-695	-895	-
Net Cash Flow	Rs m	483	-322	-

Current Valuations for HONEYWELL AUTOMATION

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 520.4, an decline from the EPS of Rs 556.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 47,416.6, stands at 91.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 16.3 times, while the price to sales ratio stands at 13.8 times.
• The company's price to cash flow (P/CF) ratio stood at 64.5 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	3,721.7	3,442.1
TTM Earnings per share	Rs	556.0	520.4
Diluted earnings per share	Rs	555.9	520.3
Price to Cash Flow	x	43.1	64.5
TTM P/E ratio	x	46.8	91.1
Price / Book Value ratio	x	12.1	12.8
Market Cap	Rs m	263,660	327,909
Dividends per share (Unadj.)	Rs	75.0	85.0

Ratio Analysis for HONEYWELL AUTOMATION

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.8x during FY21, from 2.5x 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 68.2x during FY21, from 69.4x 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 17.9% during FY21, from 22.6% 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 24.4% during FY21, from 32.1% 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 12.0% during FY21, from 14.7% 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	2.5	2.8
Debtors’ Days	Days	824	1,147
Interest coverage	x	69.4	68.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	14.7	12.0
Return on equity	%	22.6	17.9
Return on capital employed	%	32.1	24.4

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

HONEYWELL AUTOMATION Share Price Performance

Over the last one year, HONEYWELL AUTOMATION share price has moved up from Rs 25,950.8 to Rs 47,416.6, registering a gain of Rs 21,465.8 or around 82.7%.

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 HONEYWELL AUTOMATION and quarterly results for HONEYWELL AUTOMATION)

Read: Latest Annual Report Analysis of HONEYWELL AUTOMATION