SALEM ERODE INVESTMENTS 2022-23 Annual Report Analysis

Tue, 27 Jun

SALEM ERODE INVESTMENTS has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

SALEM ERODE INVESTMENTS Income Statement Analysis

• Interest income during the year rose 44.1% on a year-on-year (YoY) basis.
• Interest expenses were up by 582.8% YoY during the same period.
• Operating expenses increased by 80.6% YoY during the year.
• The company's net interest income (NII) decreased by 5.2% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 8.2% in FY23 as against 8.6% in FY22.
• Other income increased by 10.7% YoY during the year.
• Net profit for the year declined by 113.6% YoY.
• Net profit margins during the year declined to -2.4% in FY23 from 25.6% in FY22.

SALEM ERODE INVESTMENTS Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	28	40	44.1%
Other Income	Rs m	0	0	10.7%
Interest Expense	Rs m	2	16	582.8%
Net Interest Income	Rs m	25	24	-5.2%
Operating Expense	Rs m	12	21	80.6%
Pre-provision Operating Profit	Rs m	14	3	-76.8%
Provisions & Contingencies	Rs m	13,561	11,536	-14.9%
Profit before tax	Rs m	11	-1	-107.7%
Tax	Rs m	4	0	-96.9%
Profit after tax	Rs m	7	-1	-113.6%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	8.6	8.2
Net profit margin	%	25.6	-2.4

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SALEM ERODE INVESTMENTS Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 0 m as compared to Rs 0 m in FY22, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY22, a rise of 0.0%.
• Cost of deposits for SALEM ERODE INVESTMENTS rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 293 m during the year from Rs 297 m in FY22.
• Borrowing stood at Rs 0 m, a growth of 0.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 378 m as against Rs 371 m during FY22, thereby witnessing a rise of 1.8%.

SALEM ERODE INVESTMENTS Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	260	259	-0.4%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	297	293	-1.4%
Borrowings	Rs m	0	0	0.0%
Total Assets	Rs m	371	378	1.8%

Current Valuations for SALEM ERODE INVESTMENTS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -0.1, a decline from the EPS of Rs 0.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 39.3, stands at -716.1 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.7 times, while the price to income ratio stands at 17.3 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	2.4	3.5
Earnings per share (Unadj.)	Rs	0.6	-0.1
Diluted earnings per share	Rs	0.6	-0.1
Avg P/E ratio	Rs	101.1	-716.1
Avg P/ABV ratio	Rs	2.0	1.7
Avg Market Cap	Rs	720	693
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for SALEM ERODE INVESTMENTS

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY23, from 0.0x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.00x during FY23, from 0.00x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): SALEM ERODE INVESTMENTS's capital adequacy ratio (CAR) was at 19.1% as on 31 March 2023 as compared to 18.5% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company deteriorated and stood at -0.4% during FY23, from 2.7% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company deteriorated and stood at -0.26% during FY23, from 1.92% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company deteriorated and stood at 4.09% during FY23, from 4.27% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. SALEM ERODE INVESTMENTS's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of SALEM ERODE INVESTMENTS was 1.3% in financial year 2023. This compared with 0.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.0	0.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	18.5	19.1
Return on Equity	%	2.7	-0.4
Return on Assets	%	1.9	-0.3
Return on Capital Employed	%	4.3	4.1
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.3	1.3
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how SALEM ERODE INVESTMENTS has performed over the last 5 years, please visit here.

SALEM ERODE INVESTMENTS Share Price Performance

Over the last one year, SALEM ERODE INVESTMENTS share price has moved down from Rs 46.3 to Rs 39.3, registering a loss of Rs 7.0 or around 15.1%.

Overall, the S&P BSE SENSEX is up 20.9% over the year.

(To know more, you can check out historical annual results for SALEM ERODE INVESTMENTS here and quarterly results for SALEM ERODE INVESTMENTS here)