VARROC ENGINEERING 2023-24 Annual Report Analysis

Fri, 23 Aug

VARROC ENGINEERING 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.

VARROC ENGINEERING Income Statement Analysis

• Operating income during the year rose 9.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 38.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 10.6% in FY24 as against 8.4% in FY23.
• Depreciation charges increased by 0.0% and finance costs increased by 1.9% YoY, respectively.
• Other income grew by 41.7% YoY.
• Net profit for the year grew by 1325.6% YoY.
• Net profit margins during the year grew from 0.6% in FY23 to 7.3% in FY24.

VARROC ENGINEERING Income Statement 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Net Sales	Rs m	68,912	75,519	9.6%
Other income	Rs m	297	421	41.7%
Total Revenues	Rs m	69,209	75,941	9.7%
Gross profit	Rs m	5,802	8,034	38.5%
Depreciation	Rs m	3,367	3,368	0.0%
Interest	Rs m	1,903	1,939	1.9%
Profit before tax	Rs m	829	3,149	280.0%
Tax	Rs m	441	-2,381	NA
Profit after tax	Rs m	388	5,530	1,325.6%
Gross profit margin	%	8.4	10.6
Effective tax rate	%	53.2	-75.6
Net profit margin	%	0.6	7.3

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VARROC ENGINEERING Balance Sheet Analysis

• The company's current liabilities during FY24 down at Rs 22 billion as compared to Rs 29 billion in FY23, thereby witnessing an decrease of -24.9%.
• Long-term debt stood at Rs 7 billion as compared to Rs 4 billion during FY23, a growth of 56.6%.
• Current assets fell 5% and stood at Rs 17 billion, while fixed assets fell 6% and stood at Rs 27 billion in FY24.
• Overall, the total assets and liabilities for FY24 stood at Rs 44 billion as against Rs 46 billion during FY23, thereby witnessing a fall of 5%.

VARROC ENGINEERING Balance Sheet as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	9,762	14,970	53.4
Current Liabilities	Rs m	28,743	21,587	-24.9
Long-term Debt	Rs m	4,161	6,517	56.6
Total Liabilities	Rs m	46,139	43,637	-5.4
Current assets	Rs m	17,763	16,951	-4.6
Fixed Assets	Rs m	28,376	26,687	-6.0
Total Assets	Rs m	46,139	43,637	-5.4

VARROC ENGINEERING Cash Flow Statement Analysis

• VARROC ENGINEERING's cash flow from operating activities (CFO) during FY24 stood at Rs 6 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY24 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY24 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY24 stood at Rs -2 billion from the Rs 221 million net cash flows seen during FY23.

VARROC ENGINEERING 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	6,862	6,385	-7.0%
Cash Flow from Investing Activities	Rs m	-2,856	-1,665	-
Cash Flow from Financing Activities	Rs m	-2,160	-6,641	-
Net Cash Flow	Rs m	221	-1,919	-

Current Valuations for VARROC ENGINEERING

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 36.2, an improvement from the EPS of Rs 2.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 590.2, stands at 18.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.0 times, while the price to sales ratio stands at 1.2 times.
• The company's price to cash flow (P/CF) ratio stood at 7.6 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	451.0	494.3
TTM Earnings per share	Rs	2.5	36.2
Diluted earnings per share	Rs	2.5	36.2
Price to Cash Flow	x	10.1	7.6
TTM P/E ratio	x	113.8	18.4
Price / Book Value ratio	x	5.7	4.5
Market Cap	Rs m	56,103	67,341
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for VARROC ENGINEERING

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.8x during FY24, from 0.6x 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 2.6x during FY24, from 1.4x 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 improved and stood at 36.9% during FY24, from 4.0% 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 23.7% during FY24, from 19.6% 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 improved and stood at 17.1% during FY24, from 5.0% 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	0.6	0.8
Debtors’ Days	Days	32	24
Interest coverage	x	1.4	2.6
Debt to equity ratio	x	0.4	0.4
Return on assets	%	5.0	17.1
Return on equity	%	4.0	36.9
Return on capital employed	%	19.6	23.7

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

VARROC ENGINEERING Share Price Performance

Over the last one year, VARROC ENGINEERING share price has moved up from Rs 418.3 to Rs 590.2, registering a gain of Rs 171.9 or around 41.1%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 73,431.6 (up 0.3%). Over the last one year it has moved up from 44,700.9 to 73,431.6, a gain of 28,731 points (up 64.3%).

Overall, the S&P BSE SENSEX is up 24.4% over the year.

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