L&T 2021-22 Annual Report Analysis

Sun, 17 Jul

L&T 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.

L&T Income Statement Analysis

• Operating income during the year rose 15.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 14.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 12.8% in FY22 as against 12.9% in FY21.
• Depreciation charges increased by 1.5% and finance costs decreased by 20.8% YoY, respectively.
• Other income grew by 13.8% YoY.
• Net profit for the year grew by 120.4% YoY.
• Net profit margins during the year grew from 3.4% in FY21 to 6.6% in FY22.

L&T Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	1,359,790	1,565,212	15.1%
Other income	Rs m	61,281	69,718	13.8%
Total Revenues	Rs m	1,421,072	1,634,930	15.0%
Gross profit	Rs m	175,155	200,360	14.4%
Depreciation	Rs m	29,042	29,480	1.5%
Interest	Rs m	120,597	95,522	-20.8%
Profit before tax	Rs m	86,798	145,077	67.1%
Tax	Rs m	40,108	42,166	5.1%
Profit after tax	Rs m	46,690	102,911	120.4%
Gross profit margin	%	12.9	12.8
Effective tax rate	%	46.2	29.1
Net profit margin	%	3.4	6.6

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L&T Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 1,594 billion as compared to Rs 1,374 billion in FY21, thereby witnessing an increase of 16.0%.
• Long-term debt down at Rs 616 billion as compared to Rs 821 billion during FY21, a fall of 25.0%.
• Current assets rose 7% and stood at Rs 2,082 billion, while fixed assets fell 4% and stood at Rs 1,090 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 3,172 billion as against Rs 3,086 billion during FY21, thereby witnessing a growth of 3%.

L&T Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	754,849	820,360	8.7
Current Liabilities	Rs m	1,374,080	1,594,335	16.0
Long-term Debt	Rs m	821,200	616,183	-25.0
Total Liabilities	Rs m	3,085,767	3,172,088	2.8
Current assets	Rs m	1,949,668	2,081,812	6.8
Fixed Assets	Rs m	1,136,099	1,090,277	-4.0
Total Assets	Rs m	3,085,767	3,172,088	2.8

L&T Cash Flow Statement Analysis

• L&T's cash flow from operating activities (CFO) during FY22 stood at Rs 192 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -37 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -152 billion, an improvement of 1% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 4 billion from the Rs 20 billion net cash flows seen during FY21.

L&T 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	230,738	191,636	-16.9%
Cash Flow from Investing Activities	Rs m	-56,585	-36,677	-
Cash Flow from Financing Activities	Rs m	-152,744	-151,815	-
Net Cash Flow	Rs m	20,490	3,967	-80.6%

Current Valuations for L&T

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 73.2, an improvement from the EPS of Rs 33.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,684.6, stands at 23.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.9 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 18.0 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	968.1	1,114.0
TTM Earnings per share	Rs	33.2	73.2
Diluted earnings per share	Rs	33.2	73.2
Price to Cash Flow	x	26.3	18.0
TTM P/E ratio	x	42.7	23.0
Price / Book Value ratio	x	2.2	2.9
Market Cap	Rs m	1,654,566	2,377,731
Dividends per share (Unadj.)	Rs	36.0	22.0

Ratio Analysis for L&T

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY22, from 1.4x 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 2.5x during FY22, from 1.7x 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 12.5% during FY22, from 6.2% 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 16.7% during FY22, from 13.2% 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 6.3% during FY22, from 5.4% 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	1.4	1.3
Debtors’ Days	Days	11	11
Interest coverage	x	1.7	2.5
Debt to equity ratio	x	1.1	0.8
Return on assets	%	5.4	6.3
Return on equity	%	6.2	12.5
Return on capital employed	%	13.2	16.7

To see how L&T has performed over the last 5 years, please visit here.

L&T Share Price Performance

Over the last one year, L&T share price has moved up from Rs 1,619.1 to Rs 1,684.6, registering a gain of Rs 65.5 or around 4.0%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 27,634.8 (up 1.5%). Over the last one year it has moved up from 23,868.7 to 27,634.8, a gain of 3,766 points (up 15.8%).

Overall, the S&P BSE SENSEX is up 1.6% over the year.

(To know more, check out historical annual results for L&T and quarterly results for L&T)

Read: Latest Annual Report Analysis of L&T