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SEPC 2022-23 Annual Report Analysis

Fri, 31 Mar

SEPC has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

SEPC Income Statement Analysis

• Operating income during the year rose 15.0% on a year-on-year (YoY) basis.
• The company's operating profit was by NA YoY during the fiscal. Operating profit margins witnessed a fall and down at 20.8% in FY23 as against 30.6% in FY22.
• Depreciation charges increased by 5.5% and finance costs decreased by 46.2% YoY, respectively.
• Other income grew by 79.9% YoY.
• Net profit for the year declined by NA YoY.
• Net profit margins during the year grew from 80.0% in FY22 to 1.3% in FY23.

SEPC Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	3,295	3,788	15.0%
Other income	Rs m	111	200	79.9%
Total Revenues	Rs m	3,406	3,989	17.1%
Gross profit	Rs m	-1,009	788	NA
Depreciation	Rs m	58	61	5.5%
Interest	Rs m	1,253	674	-46.2%
Profit before tax	Rs m	-2,209	253	NA
Tax	Rs m	428	302	-29.4%
Profit after tax	Rs m	-2,637	-49	NA
Gross profit margin	%	-30.6	20.8
Effective tax rate	%	-19.4	119.4
Net profit margin	%	-80.0	-1.3

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SEPC Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 6 billion as compared to Rs 13 billion in FY22, thereby witnessing an decrease of -53.9%.
• Long-term debt stood at Rs 3 billion as compared to Rs 2 billion during FY22, a growth of 73.2%.
• Current assets fell 10% and stood at Rs 13 billion, while fixed assets fell 12% and stood at Rs 4 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 17 billion as against Rs 18 billion during FY22, thereby witnessing a fall of 10%.

SEPC Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	7,380	10,865	47.2
Current Liabilities	Rs m	12,560	5,792	-53.9
Long-term Debt	Rs m	1,536	2,662	73.2
Total Liabilities	Rs m	18,452	16,540	-10.4
Current assets	Rs m	14,086	12,735	-9.6
Fixed Assets	Rs m	4,306	3,805	-11.6
Total Assets	Rs m	18,452	16,540	-10.4

SEPC Cash Flow Statement Analysis

• SEPC's cash flow from operating activities (CFO) during FY23 stood at Rs 209 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 125 million, an improvement of 1,117.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -61 million on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 272 million from the Rs -26 million net cash flows seen during FY22.

SEPC Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	-720	209	-
Cash Flow from Investing Activities	Rs m	10	125	1,117.7%
Cash Flow from Financing Activities	Rs m	684	-61	-
Net Cash Flow	Rs m	-26	272	-

Current Valuations for SEPC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 0.0, an improvement from the EPS of Rs -2.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 10.5, stands at -300.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.4 times, while the price to sales ratio stands at 3.6 times.
• The company's price to cash flow (P/CF) ratio stood at 1,179.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	3.4	2.9
TTM Earnings per share	Rs	-2.7	0.0
Diluted earnings per share	Rs	-1.9	0.0
Price to Cash Flow	x	-4.1	1,179.1
TTM P/E ratio	x	-4.0	-300.4
Price / Book Value ratio	x	1.1	1.3
Market Cap	Rs m	7,879	14,662
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for SEPC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.2x during FY23, from 1.1x during FY22. 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 improved and stood at 1.4x during FY23, from -0.8x during FY22. 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 -0.5% during FY23, from -35.7% during FY23. 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 6.9% during FY23, from -10.7% during FY22. 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 3.8% during FY23, from -7.5% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.1	2.2
Debtors’ Days	Days	4,127	2,814
Interest coverage	x	-0.8	1.4
Debt to equity ratio	x	0.2	0.2
Return on assets	%	-7.5	3.8
Return on equity	%	-35.7	-0.5
Return on capital employed	%	-10.7	6.9

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

SEPC Share Price Performance

Over the last one year, SEPC share price has moved up from Rs 7.6 to Rs 10.5, registering a gain of Rs 2.9 or around 38.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 34,369.7 (up 1.2%). Over the last one year it has moved up from 27,506.0 to 34,369.7, a gain of 6,864 points (up 25.0%).

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

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