ITC 2021-22 Annual Report Analysis

Sat, 25 Jun

ITC has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

ITC Income Statement Analysis

• Operating income during the year rose 23.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 21.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 36.7% in FY22 as against 37.5% in FY21.
• Depreciation charges increased by 5.3% and finance costs increased by 3.5% YoY, respectively.
• Other income declined by 28.2% YoY.
• Net profit for the year grew by 15.7% YoY.
• Net profit margins during the year declined from 29.5% in FY21 to 27.6% in FY22.

ITC Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	453,904	561,312	23.7%
Other income	Rs m	26,337	18,922	-28.2%
Total Revenues	Rs m	480,242	580,235	20.8%
Gross profit	Rs m	170,149	206,232	21.2%
Depreciation	Rs m	16,456	17,324	5.3%
Interest	Rs m	580	600	3.5%
Profit before tax	Rs m	179,451	207,230	15.5%
Tax	Rs m	45,553	52,373	15.0%
Profit after tax	Rs m	133,898	154,857	15.7%
Gross profit margin	%	37.5	36.7
Effective tax rate	%	25.4	25.3
Net profit margin	%	29.5	27.6

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ITC Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 122 billion as compared to Rs 107 billion in FY21, thereby witnessing an increase of 13.8%.
• Long-term debt down at Rs 49 million as compared to Rs 56 million during FY21, a fall of 13.1%.
• Current assets fell 2% and stood at Rs 342 billion, while fixed assets rose 11% and stood at Rs 430 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 772 billion as against Rs 738 billion during FY21, thereby witnessing a growth of 5%.

ITC Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	586,408	611,392	4.3
Current Liabilities	Rs m	106,897	121,637	13.8
Long-term Debt	Rs m	56	49	-13.1
Total Liabilities	Rs m	737,608	771,960	4.7
Current assets	Rs m	349,920	342,325	-2.2
Fixed Assets	Rs m	387,688	429,636	10.8
Total Assets	Rs m	737,608	771,960	4.7

ITC Cash Flow Statement Analysis

• ITC's cash flow from operating activities (CFO) during FY22 stood at Rs 158 billion, an improvement of 25.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -22 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -136 billion, an improvement of 27% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs -435 million from the Rs -4 billion net cash flows seen during FY21.

ITC Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	125,270	157,755	25.9%
Cash Flow from Investing Activities	Rs m	56,829	-22,385	-
Cash Flow from Financing Activities	Rs m	-186,338	-135,805	-
Net Cash Flow	Rs m	-3,669	-435	-

Current Valuations for ITC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.6, an improvement from the EPS of Rs 10.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 265.8, stands at 21.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.4 times, while the price to sales ratio stands at 5.8 times.
• The company's price to cash flow (P/CF) ratio stood at 16.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	36.9	45.5
TTM Earnings per share	Rs	10.9	12.6
Diluted earnings per share	Rs	10.9	12.6
Price to Cash Flow	x	17.9	16.6
TTM P/E ratio	x	20.1	21.2
Price / Book Value ratio	x	4.2	4.7
Market Cap	Rs m	2,438,690	2,861,460
Dividends per share (Unadj.)	Rs	10.8	11.5

Ratio Analysis for ITC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.8x during FY22, from 3.3x during FY21. 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 346.4x during FY22, from 310.6x during FY21. 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 25.3% during FY22, from 22.8% during FY22. 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 34.0% during FY22, from 30.7% during FY21. 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 20.1% during FY22, from 18.2% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	3.3	2.8
Debtors’ Days	Days	2	2
Interest coverage	x	310.6	346.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.2	20.1
Return on equity	%	22.8	25.3
Return on capital employed	%	30.7	34.0

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 205.1 to Rs 265.8, registering a gain of Rs 60.8 or around 29.6%.

Overall, the S&P BSE SENSEX is up 0.8% 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