HINDALCO 2017-18 Annual Report Analysis

Sat, 31 Mar

HINDALCO has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

HINDALCO Income Statement Analysis

• Operating income during the year rose 17.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 23.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 13.2% in FY18 as against 12.6% in FY17.
• Depreciation charges increased by 3.1% and finance costs decreased by 31.9% YoY, respectively.
• Other income grew by 29.8% YoY.
• Net profit for the year grew by 225.5% YoY.
• Net profit margins during the year grew from 2.0% in FY17 to 5.4% in FY18.

HINDALCO Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	977,361	1,145,459	17.2%
Other income	Rs m	12,603	16,363	29.8%
Total Revenues	Rs m	989,964	1,161,822	17.4%
Gross profit	Rs m	122,909	151,631	23.4%
Depreciation	Rs m	44,688	46,065	3.1%
Interest	Rs m	57,424	39,107	-31.9%
Profit before tax	Rs m	33,400	82,821	148.0%
Tax	Rs m	14,326	20,742	44.8%
Profit after tax	Rs m	19,074	62,080	225.5%
Gross profit margin	%	12.6	13.2
Effective tax rate	%	42.9	25.0
Net profit margin	%	2.0	5.4

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HINDALCO Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 328 billion as compared to Rs 382 billion in FY17, thereby witnessing an decrease of -14.2%.
• Long-term debt down at Rs 479 billion as compared to Rs 519 billion during FY17, a fall of 7.7%.
• Current assets fell 0% and stood at Rs 500 billion, while fixed assets rose 1% and stood at Rs 971 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 1,470 billion as against Rs 1,461 billion during FY17, thereby witnessing a growth of 1%.

HINDALCO Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	460,226	548,358	19.1
Current Liabilities	Rs m	381,635	327,607	-14.2
Long-term Debt	Rs m	518,553	478,743	-7.7
Total Liabilities	Rs m	1,461,444	1,470,138	0.6
Current assets	Rs m	501,140	499,633	-0.3
Fixed Assets	Rs m	960,304	970,506	1.1
Total Assets	Rs m	1,461,444	1,470,138	0.6

HINDALCO Cash Flow Statement Analysis

• HINDALCO's cash flow from operating activities (CFO) during FY18 stood at Rs 109 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 50 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -164 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -2 billion from the Rs 40 billion net cash flows seen during FY17.

HINDALCO Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	126,875	108,977	-14.1%
Cash Flow from Investing Activities	Rs m	-27,885	50,258	-
Cash Flow from Financing Activities	Rs m	-55,523	-164,124	-
Net Cash Flow	Rs m	39,604	-1,815	-

Current Valuations for HINDALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 27.9, an improvement from the EPS of Rs 8.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 214.2, stands at 29.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.4 times.
• The company's price to cash flow (P/CF) ratio stood at 4.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	438.9	514.0
TTM Earnings per share	Rs	8.6	27.9
Diluted earnings per share	Rs	8.5	27.6
Price to Cash Flow	x	6.9	4.8
TTM P/E ratio	x	28.2	29.3
Price / Book Value ratio	x	0.7	0.9
Market Cap	Rs m	318,341	516,600
Dividends per share (Unadj.)	Rs	1.1	1.2

Ratio Analysis for HINDALCO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.5x during FY18, from 1.3x during FY17. 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 3.1x during FY18, from 1.6x during FY17. 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 11.3% during FY18, from 4.1% during FY18. 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 11.9% during FY18, from 9.3% during FY17. 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 6.9% during FY18, from 5.2% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.3	1.5
Debtors’ Days	Days	3	3
Interest coverage	x	1.6	3.1
Debt to equity ratio	x	1.1	0.9
Return on assets	%	5.2	6.9
Return on equity	%	4.1	11.3
Return on capital employed	%	9.3	11.9

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

HINDALCO Share Price Performance

Over the last one year, HINDALCO share price has moved up from Rs 195.1 to Rs 214.2, registering a gain of Rs 19.1 or around 9.8%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 13,322.0 (down 2.0%). Over the last one year it has moved up from 11,804.5 to 13,322.0, a gain of 1,518 points (up 12.9%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of HINDALCO