ITC 2020-21 Annual Report Analysis

Wed, 31 Mar

ITC 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.

ITC Income Statement Analysis

• Operating income during the year fell 4.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 11.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 37.5% in FY21 as against 40.4% in FY20.
• Depreciation charges increased by 0.0% and finance costs decreased by 28.8% YoY, respectively.
• Other income grew by 1.3% YoY.
• Net profit for the year declined by 14.1% YoY.
• Net profit margins during the year declined from 32.9% in FY20 to 29.5% in FY21.

ITC Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	474,146	453,904	-4.3%
Other income	Rs m	26,006	26,337	1.3%
Total Revenues	Rs m	500,152	480,242	-4.0%
Gross profit	Rs m	191,521	170,149	-11.2%
Depreciation	Rs m	16,449	16,456	0.0%
Interest	Rs m	814	580	-28.8%
Profit before tax	Rs m	200,264	179,451	-10.4%
Tax	Rs m	44,418	45,553	2.6%
Profit after tax	Rs m	155,846	133,898	-14.1%
Gross profit margin	%	40.4	37.5
Effective tax rate	%	22.2	25.4
Net profit margin	%	32.9	29.5

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ITC Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 107 billion as compared to Rs 96 billion in FY20, thereby witnessing an increase of 11.8%.
• Long-term debt down at Rs 56 million as compared to Rs 59 million during FY20, a fall of 5.4%.
• Current assets fell 11% and stood at Rs 350 billion, while fixed assets rose 3% and stood at Rs 388 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 738 billion as against Rs 773 billion during FY20, thereby witnessing a fall of 5%.

ITC Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	632,511	586,408	-7.3
Current Liabilities	Rs m	95,598	106,897	11.8
Long-term Debt	Rs m	59	56	-5.4
Total Liabilities	Rs m	773,108	737,608	-4.6
Current assets	Rs m	395,054	349,920	-11.4
Fixed Assets	Rs m	378,054	387,688	2.5
Total Assets	Rs m	773,108	737,608	-4.6

ITC Cash Flow Statement Analysis

• ITC's cash flow from operating activities (CFO) during FY21 stood at Rs 125 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs 57 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -186 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -4 billion from the Rs 3 billion net cash flows seen during FY20.

ITC 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	146,897	125,271	-14.7%
Cash Flow from Investing Activities	Rs m	-61,740	56,829	-
Cash Flow from Financing Activities	Rs m	-81,815	-186,338	-
Net Cash Flow	Rs m	3,342	-3,669	-

Current Valuations for ITC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.9, an decline from the EPS of Rs 12.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 218.5, stands at 20.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.6 times, while the price to sales ratio stands at 5.9 times.
• The company's price to cash flow (P/CF) ratio stood at 16.2 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	38.6	36.9
TTM Earnings per share	Rs	12.7	10.9
Diluted earnings per share	Rs	12.6	10.9
Price to Cash Flow	x	12.3	16.2
TTM P/E ratio	x	14.0	20.1
Price / Book Value ratio	x	4.3	4.2
Market Cap	Rs m	2,735,021	2,438,690
Dividends per share (Unadj.)	Rs	10.2	10.8

Ratio Analysis for ITC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 3.3x during FY21, from 4.1x 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 310.6x during FY21, from 247.1x 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 declined and down at 22.8% during FY21, from 24.6% 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 declined and down at 30.7% during FY21, from 31.8% 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 declined and down at 18.2% during FY21, from 20.3% 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	4.1	3.3
Debtors’ Days	Days	2	2
Interest coverage	x	247.1	310.6
Debt to equity ratio	x	0.0	0.0
Return on assets	%	20.3	18.2
Return on equity	%	24.6	22.8
Return on capital employed	%	31.8	30.7

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

ITC Share Price Performance

Over the last one year, ITC share price has moved up from Rs 172.0 to Rs 218.5, registering a gain of Rs 46.5 or around 27.0%.

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

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

Read: Latest Annual Report Analysis of ITC