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I read an annual report for the 1st time and here's what I understood from Visaka Industries Annual report FY21.
A thread on financials:
A thread on financials:
CFO comments:
Talks about generating superior returns to the shareholders. He says that the company seeks to maximize capital efficiency, value addition, and working capital management.
2/n
Talks about generating superior returns to the shareholders. He says that the company seeks to maximize capital efficiency, value addition, and working capital management.
2/n
As a stated policy, the company intends to increase the proportion of non-textiles non-roofing revenues to 25% of its turnover by 2022-23. It shows that the company is trying to diversify its revenue mix.
3/n
3/n
The firm utilized only 20% of the sanctioned short-term loans, which decreased the interest outflow and improved profitability. The company has continued to focus on shrinking the receivables cycle and developing a value-added product mix.
4/n
4/n
Out of the total 150 crore profit it generated for FY21, it paid 16.50% as a dividend.
EBIDTA increased by 30%
Net profit increased by 124.5%
663 bps increase in the EBIDTA margin
5/n
EBIDTA increased by 30%
Net profit increased by 124.5%
663 bps increase in the EBIDTA margin
5/n
ROCE increased from 9.03% in FY20 to 20.31% in FY21
The cost of debt has been decreasing for the last 3 years.
The interest coverage of the company has doubled from 6.6 in FY20 to 15.8 in FY21
6/n
The cost of debt has been decreasing for the last 3 years.
The interest coverage of the company has doubled from 6.6 in FY20 to 15.8 in FY21
6/n
Stock performance:
The stock price CAGR of the company in the last 3 years stands at -10%. But the company has recovered well due to the wide price gap between the asbestos sheets and steel sheets in the last year. The stock price CAGR for last year stands at 251%.
7/n
The stock price CAGR of the company in the last 3 years stands at -10%. But the company has recovered well due to the wide price gap between the asbestos sheets and steel sheets in the last year. The stock price CAGR for last year stands at 251%.
7/n
Income statement:
The 9 yrs sales growth of the firm is just 5%. . The EBIDTA margins stand at 10% for the last 9 years and 9% in the last 3 years. Overall sales growth has been lukewarm. The net profit for last 3 years stands at 18%.
8/n
The 9 yrs sales growth of the firm is just 5%. . The EBIDTA margins stand at 10% for the last 9 years and 9% in the last 3 years. Overall sales growth has been lukewarm. The net profit for last 3 years stands at 18%.
8/n
The operating margin also dipped the previous 2 years. The interest coverage has raised significantly to 12.7% in FY21. The company has managed to improve the interest coverage ratio over the last 8 years. The financials have taken a dip in the years 2019 and 2020.
9/n
9/n
Balance sheet:
The company has managed to bring down the D/E ratio from 1.02 in FY16 to 0.25 in FY21. The debt was brought down from 278 crs to 39 crs in the same period. In the last 10 years company borrowed 129 crores of long-term debt and repaid 106 crores.
10/n
The company has managed to bring down the D/E ratio from 1.02 in FY16 to 0.25 in FY21. The debt was brought down from 278 crs to 39 crs in the same period. In the last 10 years company borrowed 129 crores of long-term debt and repaid 106 crores.
10/n
The interest expense declined from 17 crores in FY20 to 12 crores in FY21. It intends to become net debt-free in the current financial year.
11/n
11/n
The average net fixed asset turnover for the last 9 years stands at 3.1x. It is interesting to note that the average sales growth for the same period is just 5% despite having a good asset turnover. There is a jump in fixed assets from 322 in FY18 to 419 in FY20
12/n
12/n
As stated by the CFO the working capital cycle declined from 124 days in FY20 to 84 days in FY21. Receivables declined from 49 days to 33 days and inventory declined from 106 days to 79 days in the same period.
Cash flow:
For the last 5 yrs, > 80% of the company’s profits are coming from cash flow from operating activities. It has done a CAPEX of 75 crores (26% of the profit) for boards unit in Coimbatore. Another new plant is expected to commence its operation in TN this yr
14/n
For the last 5 yrs, > 80% of the company’s profits are coming from cash flow from operating activities. It has done a CAPEX of 75 crores (26% of the profit) for boards unit in Coimbatore. Another new plant is expected to commence its operation in TN this yr
14/n
Most of the financials have improved in the current financial year. But the price fluctuations in the steel will decide how the company performs going forward. It will be interesting to see if the company will withstand the current margins in the coming years.
15/n
15/n
69% of the company’s revenue and 85.5% EBIDTA comes from the asbestos sheets business. This market is projected to grow at a mere 3% CAGR in the next 5 years. It is evident that the company is trying to diversify and generate more revenue from other product offerings.
16/n
16/n
The company has a target of 25% revenue generation from non-rooofing and non-textile business. So a lot depends on how the company positions and distributes its indigenous solar roofing product ATUM.
17/n
17/n
I have read about ARs on Varsity Zerodha by Karthik Rangappa and watched videos of the School of intrinsic compounding (SOIC) by Mohit and TechnoFunda Investing by Vivek Mashrani. I would like to thank them all for helping me to learn and understand how to read annual reports.
Sources: All the above-mentioned data has been collected from the FY21 annual report of Visaka industries and screener.
End of thread.
End of thread.
