VARDHMAN HOLDINGS 2022-23 Annual Report Analysis

Tue, 20 Feb

VARDHMAN HOLDINGS has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

VARDHMAN HOLDINGS Income Statement Analysis

• Interest income during the year fell 82.2% on a year-on-year (YoY) basis.
• Interest expenses were down by 93.3% YoY during the same period.
• Operating expenses increased by 44.1% YoY during the year.
• The company's net interest income (NII) decreased by 82.2% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 0.2% in FY23 as against 1.2% in FY22.
• Other income increased by 1.5% YoY during the year.
• Net profit for the year declined by 46.8% YoY.
• Net profit margins during the year increased to 3881.6% in FY23 from 1296.7% in FY22.

VARDHMAN HOLDINGS Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	331	59	-82.2%
Other Income	Rs m	19	19	1.5%
Interest Expense	Rs m	0	0	-93.3%
Net Interest Income	Rs m	330	59	-82.2%
Operating Expense	Rs m	30	44	44.1%
Pre-provision Operating Profit	Rs m	319	34	-89.3%
Provisions & Contingencies	Rs m	0	0	0.0%
Profit before tax	Rs m	4,595	2,249	-51.0%
Tax	Rs m	304	-35	-111.6%
Profit after tax	Rs m	4,291	2,284	-46.8%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	1.2	0.2
Net profit margin	%	1296.7	3881.6

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VARDHMAN HOLDINGS Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 0 m as compared to Rs 0 m in FY22, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY22, a rise of 0.0%.
• Cost of deposits for VARDHMAN HOLDINGS rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 30.7 bn during the year from Rs 27.4 bn in FY22.
• Borrowing stood at Rs 0 m, a growth of 0.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 30.8 bn as against Rs 27.5 bn during FY22, thereby witnessing a rise of 12.0%.

VARDHMAN HOLDINGS Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	27,768	30,996	11.6%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	27,379	30,651	12.0%
Borrowings	Rs m	0	0	0.0%
Total Assets	Rs m	27,534	30,826	12.0%

Current Valuations for VARDHMAN HOLDINGS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 716.1, an improvement from the EPS of Rs 1,345.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,566.6, stands at 4.5 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.3 times, while the price to income ratio stands at 173.6 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	103.7	18.4
Earnings per share (Unadj.)	Rs	1,345.1	716.1
Diluted earnings per share	Rs	1,344.4	715.8
Avg P/E ratio	Rs	2.3	4.5
Avg P/ABV ratio	Rs	0.4	0.3
Avg Market Cap	Rs	10,002	10,217
Dividends per share (Unadj.)	Rs	5.00	5.00

Ratio Analysis for VARDHMAN HOLDINGS

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY23, from 0.0x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.00x during FY23, from 0.00x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): VARDHMAN HOLDINGS's capital adequacy ratio (CAR) was at 101.3% as on 31 March 2023 as compared to 149.3% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company deteriorated and stood at 7.4% during FY23, from 15.5% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company deteriorated and stood at 7.41% during FY23, from 15.58% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company deteriorated and stood at 7.66% during FY23, from 18.08% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. VARDHMAN HOLDINGS's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of VARDHMAN HOLDINGS was 0.0% in financial year 2023. This compared with 0.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.0	0.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	149.3	101.3
Return on Equity	%	15.5	7.4
Return on Assets	%	15.6	7.4
Return on Capital Employed	%	18.1	7.7
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.0	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

VARDHMAN HOLDINGS Share Price Performance

Over the last one year, VARDHMAN HOLDINGS share price has moved down from Rs 3,656.1 to Rs 2,566.6, registering a loss of Rs 1,089.5 or around 29.8%.

Overall, the S&P BSE SENSEX is up 1.8% over the year.

(To know more, you can check out historical annual results for VARDHMAN HOLDINGS here and quarterly results for VARDHMAN HOLDINGS here)