IPCA LABS 2020-21 Annual Report Analysis

Wed, 31 Mar

IPCA LABS has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

IPCA LABS Income Statement Analysis

• Operating income during the year rose 17.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 66.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 27.6% in FY21 as against 19.4% in FY20.
• Depreciation charges decreased by 0.6% and finance costs decreased by 37.9% YoY, respectively.
• Other income grew by 49.4% YoY.
• Net profit for the year grew by 87.9% YoY.
• Net profit margins during the year grew from 13.3% in FY20 to 21.4% in FY21.

IPCA LABS Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	45,894	53,699	17.0%
Other income	Rs m	865	1,292	49.4%
Total Revenues	Rs m	46,759	54,991	17.6%
Gross profit	Rs m	8,905	14,812	66.3%
Depreciation	Rs m	2,105	2,092	-0.6%
Interest	Rs m	198	123	-37.9%
Profit before tax	Rs m	7,467	13,890	86.0%
Tax	Rs m	1,353	2,401	77.4%
Profit after tax	Rs m	6,114	11,488	87.9%
Gross profit margin	%	19.4	27.6
Effective tax rate	%	18.1	17.3
Net profit margin	%	13.3	21.4

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IPCA LABS Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 11 billion as compared to Rs 13 billion in FY20, thereby witnessing an decrease of -14.6%.
• Long-term debt down at Rs 365 million as compared to Rs 1 billion during FY20, a fall of 64.5%.
• Current assets rose 20% and stood at Rs 34 billion, while fixed assets rose 9% and stood at Rs 26 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 61 billion as against Rs 53 billion during FY20, thereby witnessing a growth of 15%.

IPCA LABS Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	36,155	47,017	30.0
Current Liabilities	Rs m	13,264	11,331	-14.6
Long-term Debt	Rs m	1,030	365	-64.5
Total Liabilities	Rs m	52,578	60,664	15.4
Current assets	Rs m	28,557	34,370	20.4
Fixed Assets	Rs m	24,021	26,295	9.5
Total Assets	Rs m	52,578	60,664	15.4

IPCA LABS Cash Flow Statement Analysis

• IPCA LABS's cash flow from operating activities (CFO) during FY21 stood at Rs 11 billion, an improvement of 91.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -5 billion, an improvement of 2.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 3 billion from the Rs -755 million net cash flows seen during FY20.

IPCA LABS Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	5,704	10,901	91.1%
Cash Flow from Investing Activities	Rs m	-5,097	-5,207	-
Cash Flow from Financing Activities	Rs m	-1,365	-3,058	-
Net Cash Flow	Rs m	-755	2,636	-

Current Valuations for IPCA LABS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 90.6, an improvement from the EPS of Rs 48.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,902.8, stands at 42.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 10.3 times, while the price to sales ratio stands at 4.5 times.
• The company's price to cash flow (P/CF) ratio stood at 17.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	363.2	423.3
TTM Earnings per share	Rs	48.4	90.6
Diluted earnings per share	Rs	24.1	45.3
Price to Cash Flow	x	42.8	17.9
TTM P/E ratio	x	57.6	42.0
Price / Book Value ratio	x	4.3	5.2
Market Cap	Rs m	155,407	242,728
Dividends per share (Unadj.)	Rs	2.5	4.0

Ratio Analysis for IPCA LABS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.0x during FY21, from 2.2x during FY20. 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 114.2x during FY21, from 38.8x during FY20. 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 24.4% during FY21, from 16.9% during FY21. 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 29.6% during FY21, from 20.6% during FY20. 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 19.1% during FY21, from 12.0% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	2.2	3.0
Debtors’ Days	Days	7	6
Interest coverage	x	38.8	114.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	12.0	19.1
Return on equity	%	16.9	24.4
Return on capital employed	%	20.6	29.6

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

IPCA LABS Share Price Performance

Over the last one year, IPCA LABS share price has moved up from Rs 1,388.1 to Rs 1,902.8, registering a gain of Rs 514.7 or around 37.1%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 21,328.2 (up 0.4%). Over the last one year it has moved up from 12,148.6 to 21,328.2, a gain of 9,180 points (up 75.6%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

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

Read: Latest Annual Report Analysis of IPCA LABS