NOVARTIS 2023-24 Annual Report Analysis

Mon, 8 Jul

NOVARTIS has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during FY23-24.

NOVARTIS Income Statement Analysis

• Operating income during the year fell 11.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 0.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.5% in FY24 as against 17.2% in FY23.
• Depreciation charges decreased by 56.9% and finance costs decreased by 14.9% YoY, respectively.
• Other income grew by 6.1% YoY.
• Net profit for the year declined by 17.6% YoY.
• Net profit margins during the year declined from 27.3% in FY23 to 25.4% in FY24.

NOVARTIS Income Statement 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Net Sales	Rs m	3,787	3,351	-11.5%
Other income	Rs m	581	617	6.1%
Total Revenues	Rs m	4,369	3,968	-9.2%
Gross profit	Rs m	651	653	0.3%
Depreciation	Rs m	61	26	-56.9%
Interest	Rs m	18	15	-14.9%
Profit before tax	Rs m	1,154	1,228	6.5%
Tax	Rs m	120	377	213.2%
Profit after tax	Rs m	1,034	852	-17.6%
Gross profit margin	%	17.2	19.5
Effective tax rate	%	10.4	30.6
Net profit margin	%	27.3	25.4

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NOVARTIS Balance Sheet Analysis

• The company's current liabilities during FY24 stood at Rs 4 billion as compared to Rs 3 billion in FY23, thereby witnessing an increase of 49.0%.
• Current assets rose 20% and stood at Rs 9 billion, while fixed assets fell 27% and stood at Rs 9 billion in FY24.
• Overall, the total assets and liabilities for FY24 stood at Rs 19 billion as against Rs 21 billion during FY23, thereby witnessing a fall of 9%.

NOVARTIS Balance Sheet as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	7,757	7,448	-4.0
Current Liabilities	Rs m	2,683	3,998	49.0
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	20,517	18,609	-9.3
Current assets	Rs m	7,861	9,419	19.8
Fixed Assets	Rs m	12,656	9,190	-27.4
Total Assets	Rs m	20,517	18,609	-9.3

NOVARTIS Cash Flow Statement Analysis

• NOVARTIS's cash flow from operating activities (CFO) during FY24 stood at Rs 1 billion, an improvement of 153.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY24 stood at Rs 331 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY24 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY24 stood at Rs 255 million from the Rs -1 billion net cash flows seen during FY23.

NOVARTIS Cash Flow Statement 2023-24

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-23	Mar-24
Cash Flow from Operating Activities	Rs m	448	1,134	153.1%
Cash Flow from Investing Activities	Rs m	-1,533	331	-
Cash Flow from Financing Activities	Rs m	-305	-1,210	-
Net Cash Flow	Rs m	-1,389	255	-

Current Valuations for NOVARTIS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 34.5, an decline from the EPS of Rs 41.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,140.0, stands at 33.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 8.4 times.
• The company's price to cash flow (P/CF) ratio stood at 25.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Sales per share (Unadj.)	Rs	153.4	135.7
TTM Earnings per share	Rs	41.9	34.5
Diluted earnings per share	Rs	41.9	34.5
Price to Cash Flow	x	12.8	25.1
TTM P/E ratio	x	13.5	33.0
Price / Book Value ratio	x	2.1	3.0
Market Cap	Rs m	16,262	22,037
Dividends per share (Unadj.)	Rs	47.5	25.0

Ratio Analysis for NOVARTIS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY24, from 2.9x during FY23. 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 83.4x during FY24, from 66.9x during FY23. 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 11.4% during FY24, from 13.3% during FY24. 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 FY24, from 15.1% during FY23. 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 4.7% during FY24, from 5.1% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Current ratio	x	2.9	2.4
Debtors’ Days	Days	35	45
Interest coverage	x	66.9	83.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	5.1	4.7
Return on equity	%	13.3	11.4
Return on capital employed	%	15.1	16.7

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

NOVARTIS Share Price Performance

Over the last one year, NOVARTIS share price has moved up from Rs 856.7 to Rs 1,140.0, registering a gain of Rs 283.3 or around 33.1%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 38,178.1 (down 0.2%). Over the last one year it has moved up from 25,944.1 to 38,178.1, a gain of 12,234 points (up 47.2%).

Overall, the S&P BSE SENSEX is up 21.9% over the year.

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