VARUN BEVERAGES 2019-20 Annual Report Analysis

Thu, 31 Dec

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

VARUN BEVERAGES Income Statement Analysis

• Operating income during the year fell 9.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 21.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 18.1% in CY20 as against 20.9% in CY19.
• Depreciation charges increased by 8.2% and finance costs decreased by 9.4% YoY, respectively.
• Other income declined by 13.1% YoY.
• Net profit for the year declined by 23.6% YoY.
• Net profit margins during the year declined from 6.7% in CY19 to 5.6% in CY20.

VARUN BEVERAGES Income Statement 2019-20

No. of Mths Year Ending		12 Dec-19*	12 Dec-20*	% Change
Net Sales	Rs m	70,107	63,445	-9.5%
Other income	Rs m	425	370	-13.1%
Total Revenues	Rs m	70,532	63,815	-9.5%
Gross profit	Rs m	14,623	11,480	-21.5%
Depreciation	Rs m	4,886	5,287	8.2%
Interest	Rs m	3,243	2,937	-9.4%
Profit before tax	Rs m	6,919	3,625	-47.6%
Tax	Rs m	2,241	52	-97.7%
Profit after tax	Rs m	4,678	3,573	-23.6%
Gross profit margin	%	20.9	18.1
Effective tax rate	%	32.4	1.4
Net profit margin	%	6.7	5.6

Revealing on April 30: Are You Ready for the Upcoming Election Surprise?

VARUN BEVERAGES Balance Sheet Analysis

• The company's current liabilities during CY20 stood at Rs 24 billion as compared to Rs 22 billion in CY19, thereby witnessing an increase of 9.7%.
• Long-term debt down at Rs 20 billion as compared to Rs 24 billion during CY19, a fall of 16.0%.
• Current assets rose 8% and stood at Rs 18 billion, while fixed assets fell 1% and stood at Rs 66 billion in CY20.
• Overall, the total assets and liabilities for CY20 stood at Rs 84 billion as against Rs 84 billion during CY19, thereby witnessing a growth of 1%.

VARUN BEVERAGES Balance Sheet as on December 2020

No. of Mths Year Ending		12 Dec-19*	12 Dec-20*	% Change
Networth	Rs m	33,284	35,240	5.9
Current Liabilities	Rs m	22,203	24,350	9.7
Long-term Debt	Rs m	23,554	19,796	-16.0
Total Liabilities	Rs m	83,756	84,474	0.9
Current assets	Rs m	16,719	17,997	7.6
Fixed Assets	Rs m	67,037	66,477	-0.8
Total Assets	Rs m	83,756	84,474	0.9

VARUN BEVERAGES Cash Flow Statement Analysis

• VARUN BEVERAGES's cash flow from operating activities (CFO) during CY20 stood at Rs 10 billion on a YoY basis.
• Cash flow from investing activities (CFI) during CY20 stood at Rs -5 billion on a YoY basis.
• Cash flow from financial activities (CFF) during CY20 stood at Rs -6 billion on a YoY basis.
• Overall, net cash flows for the company during CY20 stood at Rs -334 million from the Rs 950 million net cash flows seen during CY19.

VARUN BEVERAGES Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Dec-19	Dec-20
Cash Flow from Operating Activities	Rs m	13,076	10,120	-22.6%
Cash Flow from Investing Activities	Rs m	-23,192	-4,711	-
Cash Flow from Financing Activities	Rs m	11,073	-5,737	-
Net Cash Flow	Rs m	950	-334	-

Current Valuations for VARUN BEVERAGES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.4, an decline from the EPS of Rs 16.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 915.5, stands at 111.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 11.2 times, while the price to sales ratio stands at 4.2 times.
• The company's price to cash flow (P/CF) ratio stood at 24.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Dec-19*	12 Dec-20*
Sales per share (Unadj.)	Rs	242.8	219.8
TTM Earnings per share	Rs	16.2	12.4
Diluted earnings per share	Rs	10.8	8.3
Price to Cash Flow	x	32.1	24.2
TTM P/E ratio	x	65.5	111.0
Price / Book Value ratio	x	6.7	6.1
Market Cap	Rs m	223,914	214,229
Dividends per share (Unadj.)	Rs	2.5	2.5

Ratio Analysis for VARUN BEVERAGES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.7x during CY20, from 0.8x during CY19. 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 2.2x during CY20, from 3.1x during CY19. 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 10.1% during CY20, from 14.1% during CY20. 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 11.9% during CY20, from 17.9% during CY19. 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 7.7% during CY20, from 9.5% during CY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Dec-19*	12 Dec-20*
Current ratio	x	0.8	0.7
Debtors’ Days	Days	9	14
Interest coverage	x	3.1	2.2
Debt to equity ratio	x	0.7	0.6
Return on assets	%	9.5	7.7
Return on equity	%	14.1	10.1
Return on capital employed	%	17.9	11.9

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

VARUN BEVERAGES Share Price Performance

Over the last one year, VARUN BEVERAGES share price has moved down from Rs 865.2 to Rs 530.6, registering a loss of Rs 334.6 or around 38.7%.

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

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

Read: Latest Annual Report Analysis of VARUN BEVERAGES