SAKTHI FINANCE 2023-24 Annual Report Analysis

Tue, 27 Aug

SAKTHI FINANCE has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

SAKTHI FINANCE Income Statement Analysis

• Interest income during the year rose 7.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 5.9% YoY during the same period.
• Operating expenses increased by 6.7% YoY during the year.
• The company's net interest income (NII) increased by 10.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 293.3% in FY24 as against 268.0% in FY23.
• Other income increased by 39.6% YoY during the year.
• Net profit for the year increased by 25.7% YoY.
• Net profit margins during the year increased to 7.6% in FY24 from 6.5% in FY23.

SAKTHI FINANCE Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	1,918	2,067	7.8%
Other Income	Rs m	1	2	39.6%
Interest Expense	Rs m	1,093	1,157	5.9%
Net Interest Income	Rs m	825	910	10.3%
Operating Expense	Rs m	598	639	6.7%
Pre-provision Operating Profit	Rs m	228	274	19.8%
Provisions & Contingencies	Rs m	135	146	7.9%
Profit before tax	Rs m	174	215	23.7%
Tax	Rs m	49	58	18.6%
Profit after tax	Rs m	125	157	25.7%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	268.0	293.3
Net profit margin	%	6.5	7.6

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SAKTHI FINANCE Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 821 m as compared to Rs 244 m in FY23, thereby witnessing an increase of 236.4%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY23, a rise of 0.0%.
• Cost of deposits for SAKTHI FINANCE fell 74.0% and stood at 4.5%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 310 m during the year from Rs 308 m in FY23.
• Borrowing stood at Rs 1.2 bn, a fall of 14.8% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 14.2 bn as against Rs 13.0 bn during FY23, thereby witnessing a rise of 9.6%.

SAKTHI FINANCE Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	2,069	2,184	5.6%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	244	821	236.4%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	17.3	4.5
Investments	Rs m	308	310	0.8%
Borrowings	Rs m	1,465	1,248	-14.8%
Total Assets	Rs m	12,966	14,211	9.6%

Current Valuations for SAKTHI FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 2.4, an improvement from the EPS of Rs 1.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 72.4, stands at 26.9 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 2.1 times, while the price to income ratio stands at 2.0 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	29.6	31.9
Earnings per share (Unadj.)	Rs	1.9	2.4
Diluted earnings per share	Rs	1.9	2.4
Avg P/E ratio	Rs	15.5	26.9
Avg P/ABV ratio	Rs	1.0	2.1
Avg Market Cap	Rs	1,936	4,230
Dividends per share (Unadj.)	Rs	0.70	0.80

Ratio Analysis for SAKTHI FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY24, from 0.0x during FY23. 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 0.95x during FY24, from 0.83x during FY23. 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): SAKTHI FINANCE's capital adequacy ratio (CAR) was at 18.5% as on 31 March 2024 as compared to 19.7% 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 improved and stood at 7.2% during FY24, from 6.0% during FY23. 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 improved and stood at 1.11% during FY24, from 0.96% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 10.26% during FY24, from 10.00% during FY23. 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. SAKTHI FINANCE's gross NPA ratio stood at 4.8% as of 31 March 2024 compared to 5.5% 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 SAKTHI FINANCE was 2.6% in financial year 2024. This compared with 3.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.8	0.9
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	19.7	18.5
Return on Equity	%	6.0	7.2
Return on Assets	%	1.0	1.1
Return on Capital Employed	%	10.0	10.3
% of Gross NPAs	%	5.5	4.8
% of Net NPAs	%	3.0	2.6
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

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

SAKTHI FINANCE Share Price Performance

Over the last one year, SAKTHI FINANCE share price has moved up from Rs 31.8 to Rs 72.4, registering a gain of Rs 40.7 or around 128.0%.

Overall, the S&P BSE SENSEX is up 24.9% over the year.

(To know more, you can check out historical annual results for SAKTHI FINANCE here and quarterly results for SAKTHI FINANCE here)