Nayara Energy Share Price Update - Company Review

Nayara Energy Ltd.

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RATING

RECOMMENDATION

Sell

Business Type

Traditional Business

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Management

Accounting Practice

Profitability

Solvency

Growth

Valuation

RATING

RECOMMENDATION

Sell

Business Type

Traditional Business

Nayara Energy Growth

If you want to know about Nayara Energy Revenue Growth journey before investing, just go to Planify and read detailed research report which includes all the things including net growth, key ratio etc and buy Nayara Energy unlisted shares.

Nayara Energy Revenue Growth

In FY21, there was decrease in company's revenue by 11.92% year-on-year (y-o-y) primarily due to decline in oil prices, lower demand due to prevailing covid-19 pandemic and the reduced throughput on account of 20 days planned refinery shutdown during the financial year.

Nayara Energy Net Profit Growth(PAT)

In FY21, net profit decreased by 81.67% y-o-y mainly due to reduction in oil price in FY21. Moreover, the excise duty increased by 73.28% y-o-y as the government increased the excise duty on petrol by Rs. 10 and diesel by Rs. 13 which decreased the net profit of the company drastically in the financial year.

Nayara Energy EPS Growth

EPS of the company showed similar growth as with net income growth. There were no changes made in the number of shares in the company.

Nayara Energy Book Value Growth

Book value of the company, has witnessed a growth of 3.75% in FY21 y-o-y. This growth has been explained with increase in retained earnings and with cash flow hedge reserve decreasing less in FY21 than in FY20.

Nayara Energy EBITDA Growth

In FY21, EBITDA decreased by 41.66% y-o-y as there was reduction in total revenue by 11.92% y-o-y. Moreover, there was an increase in excise duty expense by 73.28% y-o-y as the government increased the excise duty on petrol by Rs. 10 and on diesel by Rs. 13 in FY21.

Nayara Energy Operating Profit Growth

The company's fixed assets decreased by 2.63% y-o-y which led to decrease in depreciation expense by Rs. 300 crores in FY21. Depreciation expense reduced as the lives of the core refinery assets increased from 40 years to 50 years, thus reducing the depreciation. Due to which, EBIT of the company decreased by 56.64% in FY21 y-o-y.

Nayara Energy Asset Growth

The company's total assets remained almost same as the company's plant and machinery and buildings decreased due to depreciation in FY21 y-o-y. Also, the company's land under right of use assets decreased which ensured the total assets remain almost the same in FY21. Moreover, total inventory of the company increased in FY21 which shows the company expected more sales.

Nayara Energy Cash Flow from Operations

In FY21, cash flow from operations decreased by 85.48% y-o-y. The cash flow from operations decreased primarily due to increase in inventories to Rs. 3416.7 crores in FY21 whereas there was decrease in inventories of Rs. 3572.9 crores in FY20. Also, there was less decrease in trade and other receivables and less decrease in trade and other payables which shows the company received amount from debtors and also paid off its creditors.

Nayara Energy Solvency Ratios

Nayara Energy D/E Ratio

A lower D/E is because of high equity which was due to change in cash flow from hedge reserve from -2,201 Cr. in FY20 to -958 Cr. in FY21. Moreover, the debt of the company reduced as the current maturities of long term debt increased to Rs. 3329.4 crores in FY21 from Rs. 791 crores in FY20.

Nayara Energy Current Ratio

The current liabilities increased because of an increase in trade payables and other financial liabilities as the company received more advance from customers. Although there was increase in current assets due to increase in inventories and trade receivables, the increase in trade payables and other financial liabilities was more than the increase in inventories and trade receivables. Thus this led to marginal decrease in the current ratio.

Nayara Energy Quick Ratio

The fall in the quick ratio has the same cause as the fall in the current ratio of the company with the increase in trade payables and other financial liabilities being more than increase in trade receivables.

Nayara Energy Interest Coverage Ratio

Reduction in interest coverage ratio is primarily due to decrease in net profit of the company even though the interest expense of the company decreased. A ratio of 0.86 shows that the company has weak solvency position in terms of interest expense coverage.

Nayara Energy Operating Efficiency

Low operating efficiency is due to decrease in revenue which was mainly due to decline in oil prices, lower demand due to prevailing Covid-19 pandemic and the reduced throughput on account of 20 days planned refinery shutdown during the financial year. Moreover, the government has increased the excise duty on crude oil which also negatively impacted the operating efficiency of the company.

Nayara Energy Operating Profit EBIT Margin(OPM)

Nayara Energy Profit Before Tax Margin (PBT Margin)

Nayara Energy Profit After Tax Margin (PAT Margin)

Nayara Energy Profitablity Ratio

Nayara Energy Return on Equity(RoE)

In FY21, the company's ROE decreased to 2.3% from 13.01% in FY20. As per dupont analysis, the one major contributor explaining the decrease in growth of the company has been net income margin, which decreased to 0.5% in FY21 from 2.5% in FY20. On the other hand, the asset turnover ratio declined to 1.15 in FY21 from 1.33 in FY20, as the company's total assets increased with the total receivables increasing by 54.9% y-o-y and total inventory increasing by 57.6% y-o-y. The equity multiplier witnessed a decrease which shows that the company is financed by equity and debt financing has reduced.

Nayara Energy Return on Capital Employed(RoCE)

In FY21, the company's ROCE decreased to 3.67 in from 8.15 in FY20. This is due to decrease of 81.7% y-o-y in net income to Rs. 458.2 crores from Rs. 2500 crores in FY20. Total capital employed of the company increased by 0.9% y-o-y from Rs. 76592.60 crores from Rs. 75913 crores in FY20. With decrease in net income and slight increase in capital employed, the ROCE of the company decreased.

Nayara Energy Return to Assets (RoA)

In FY21, the company's ROA has shown a decrease on account of lower net profit. On one hand, the total assets of the company increased by 0.9% y-o-y, and on the other hand, the net income of the company reduced by 81.7% y-o-y. This has reduced the return on assets of the company.