UPL 2019-20 Annual Report Analysis

Tue, 31 Mar

UPL has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

UPL Income Statement Analysis

• Operating income during the year rose 63.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 85.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 17.2% in FY20 as against 15.2% in FY19.
• Depreciation charges increased by 128.4% and finance costs increased by 64.6% YoY, respectively.
• Other income declined by 16.9% YoY.
• Net profit for the year grew by 39.3% YoY.
• Net profit margins during the year declined from 7.1% in FY19 to 6.1% in FY20.

UPL Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	218,370	357,560	63.7%
Other income	Rs m	3,200	2,660	-16.9%
Total Revenues	Rs m	221,570	360,220	62.6%
Gross profit	Rs m	33,180	61,500	85.4%
Depreciation	Rs m	8,810	20,120	128.4%
Interest	Rs m	9,980	16,430	64.6%
Profit before tax	Rs m	17,590	27,610	57.0%
Tax	Rs m	1,980	5,860	196.0%
Profit after tax	Rs m	15,610	21,750	39.3%
Gross profit margin	%	15.2	17.2
Effective tax rate	%	11.3	21.2
Net profit margin	%	7.1	6.1

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UPL Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 167 billion as compared to Rs 163 billion in FY19, thereby witnessing an increase of 2.6%.
• Long-term debt stood at Rs 274 billion as compared to Rs 264 billion during FY19, a growth of 3.7%.
• Current assets rose 9% and stood at Rs 292 billion, while fixed assets rose 10% and stood at Rs 392 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 684 billion as against Rs 624 billion during FY19, thereby witnessing a growth of 10%.

UPL Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	147,150	192,830	31.0
Current Liabilities	Rs m	162,620	166,850	2.6
Long-term Debt	Rs m	263,820	273,710	3.7
Total Liabilities	Rs m	624,350	684,300	9.6
Current assets	Rs m	267,220	292,420	9.4
Fixed Assets	Rs m	357,130	391,880	9.7
Total Assets	Rs m	624,350	684,300	9.6

UPL Cash Flow Statement Analysis

• UPL 's cash flow from operating activities (CFO) during FY20 stood at Rs 87 billion, an improvement of 270.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -26 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -22 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs 39 billion from the Rs -320 million net cash flows seen during FY19.

UPL Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	23,560	87,390	270.9%
Cash Flow from Investing Activities	Rs m	-309,200	-26,430	-
Cash Flow from Financing Activities	Rs m	288,940	-21,750	-
Net Cash Flow	Rs m	-320	38,980	-

Current Valuations for UPL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 28.5, an decline from the EPS of Rs 30.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 326.4, stands at 12.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 11.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	428.7	468.0
TTM Earnings per share	Rs	30.6	28.5
Diluted earnings per share	Rs	20.8	28.9
Price to Cash Flow	x	29.4	11.7
TTM P/E ratio	x	47.8	12.7
Price / Book Value ratio	x	2.6	2.5
Market Cap	Rs m	381,185	491,014
Dividends per share (Unadj.)	Rs	8.0	6.0

Ratio Analysis for UPL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.8x during FY20, from 1.6x during FY19. 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 2.7x during FY20, from 2.8x during FY19. 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 11.3% during FY20, from 10.6% during FY20. 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 9.4% during FY20, from 6.7% during FY19. 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 FY20, from 4.1% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	1.6	1.8
Debtors’ Days	Days	20	12
Interest coverage	x	2.8	2.7
Debt to equity ratio	x	1.8	1.4
Return on assets	%	4.1	5.6
Return on equity	%	10.6	11.3
Return on capital employed	%	6.7	9.4

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

UPL Share Price Performance

Over the last one year, UPL share price has moved down from Rs 956.0 to Rs 326.4, registering a loss of Rs 629.6 or around 65.9%.

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Read: Latest Annual Report Analysis of UPL