HINDALCO 2018-19 Annual Report Analysis

Sun, 31 Mar

HINDALCO has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

HINDALCO Income Statement Analysis

• Operating income during the year rose 14.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 0.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 11.7% in FY19 as against 13.2% in FY18.
• Depreciation charges increased by 3.7% and finance costs decreased by 3.4% YoY, respectively.
• Other income declined by 13.6% YoY.
• Net profit for the year declined by 11.5% YoY.
• Net profit margins during the year declined from 5.4% in FY18 to 4.2% in FY19.

HINDALCO Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	1,145,459	1,305,420	14.0%
Other income	Rs m	16,363	14,140	-13.6%
Total Revenues	Rs m	1,161,822	1,319,560	13.6%
Gross profit	Rs m	151,631	152,240	0.4%
Depreciation	Rs m	46,065	47,770	3.7%
Interest	Rs m	39,107	37,780	-3.4%
Profit before tax	Rs m	82,821	80,830	-2.4%
Tax	Rs m	20,742	25,880	24.8%
Profit after tax	Rs m	62,080	54,950	-11.5%
Gross profit margin	%	13.2	11.7
Effective tax rate	%	25.0	32.0
Net profit margin	%	5.4	4.2

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HINDALCO Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 340 billion as compared to Rs 328 billion in FY18, thereby witnessing an increase of 3.9%.
• Long-term debt stood at Rs 480 billion as compared to Rs 479 billion during FY18, a growth of 0.3%.
• Current assets rose 8% and stood at Rs 540 billion, while fixed assets rose 1% and stood at Rs 979 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 1,520 billion as against Rs 1,470 billion during FY18, thereby witnessing a growth of 3%.

HINDALCO Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	548,358	576,030	5.0
Current Liabilities	Rs m	327,607	340,250	3.9
Long-term Debt	Rs m	478,743	480,320	0.3
Total Liabilities	Rs m	1,470,138	1,519,720	3.4
Current assets	Rs m	499,633	540,340	8.1
Fixed Assets	Rs m	970,506	979,380	0.9
Total Assets	Rs m	1,470,138	1,519,720	3.4

HINDALCO Cash Flow Statement Analysis

• HINDALCO's cash flow from operating activities (CFO) during FY19 stood at Rs 120 billion, an improvement of 9.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -56 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -55 billion, an improvement of 67% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 11 billion from the Rs -2 billion net cash flows seen during FY18.

HINDALCO Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	108,977	119,770	9.9%
Cash Flow from Investing Activities	Rs m	50,258	-56,480	-
Cash Flow from Financing Activities	Rs m	-164,124	-54,660	-
Net Cash Flow	Rs m	-1,815	10,550	-

Current Valuations for HINDALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 24.7, an decline from the EPS of Rs 27.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 205.4, stands at 38.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.8 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at 4.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	514.0	586.9
TTM Earnings per share	Rs	27.9	24.7
Diluted earnings per share	Rs	27.6	24.5
Price to Cash Flow	x	4.5	4.9
TTM P/E ratio	x	29.3	38.3
Price / Book Value ratio	x	0.9	0.9
Market Cap	Rs m	516,600	500,445
Dividends per share (Unadj.)	Rs	1.2	1.2

Ratio Analysis for HINDALCO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.6x during FY19, from 1.5x during FY18. 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 FY19, from 3.1x during FY18. 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 declined and down at 9.5% during FY19, from 11.3% during FY19. 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 declined and down at 11.2% during FY19, from 11.9% during FY18. 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 declined and down at 6.1% during FY19, from 6.9% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	1.5	1.6
Debtors’ Days	Days	3	3
Interest coverage	x	3.1	3.1
Debt to equity ratio	x	0.9	0.8
Return on assets	%	6.9	6.1
Return on equity	%	11.3	9.5
Return on capital employed	%	11.9	11.2

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 down from Rs 214.2 to Rs 205.4, registering a loss of Rs 8.9 or around 4.1%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 11,355.1 (up 2.3%). Over the last one year it has moved down from 13,322.0 to 11,355.1, a loss of 1,967 points (down 14.8%).

Overall, the S&P BSE SENSEX is up 16.3% 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