HINDALCO 2019-20 Annual Report Analysis

Tue, 31 Mar

HINDALCO has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

HINDALCO Income Statement Analysis

• Operating income during the year fell 9.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 9.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.7% in FY20 as against 11.7% in FY19.
• Depreciation charges increased by 6.6% and finance costs increased by 11.1% YoY, respectively.
• Other income declined by 1.3% YoY.
• Net profit for the year declined by 31.5% YoY.
• Net profit margins during the year declined from 4.2% in FY19 to 3.2% in FY20.

HINDALCO Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	1,305,420	1,181,440	-9.5%
Other income	Rs m	14,140	13,960	-1.3%
Total Revenues	Rs m	1,319,560	1,195,400	-9.4%
Gross profit	Rs m	152,240	138,120	-9.3%
Depreciation	Rs m	47,770	50,910	6.6%
Interest	Rs m	37,780	41,970	11.1%
Profit before tax	Rs m	80,830	59,200	-26.8%
Tax	Rs m	25,880	21,570	-16.7%
Profit after tax	Rs m	54,950	37,630	-31.5%
Gross profit margin	%	11.7	11.7
Effective tax rate	%	32.0	36.4
Net profit margin	%	4.2	3.2

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HINDALCO Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 372 billion as compared to Rs 340 billion in FY19, thereby witnessing an increase of 9.4%.
• Long-term debt stood at Rs 584 billion as compared to Rs 480 billion during FY19, a growth of 21.5%.
• Current assets rose 23% and stood at Rs 663 billion, while fixed assets rose 4% and stood at Rs 1,023 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 1,686 billion as against Rs 1,520 billion during FY19, thereby witnessing a growth of 11%.

HINDALCO Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	576,030	584,030	1.4
Current Liabilities	Rs m	340,250	372,170	9.4
Long-term Debt	Rs m	480,320	583,790	21.5
Total Liabilities	Rs m	1,519,720	1,686,180	11.0
Current assets	Rs m	540,340	662,820	22.7
Fixed Assets	Rs m	979,380	1,023,360	4.5
Total Assets	Rs m	1,519,720	1,686,180	11.0

HINDALCO Cash Flow Statement Analysis

• HINDALCO's cash flow from operating activities (CFO) during FY20 stood at Rs 127 billion, an improvement of 6.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -84 billion, an improvement of 49.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs 67 billion, an improvement of 222% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs 122 billion from the Rs 11 billion net cash flows seen during FY19.

HINDALCO Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	119,770	127,450	6.4%
Cash Flow from Investing Activities	Rs m	-56,480	-84,270	-
Cash Flow from Financing Activities	Rs m	-54,660	66,560	-
Net Cash Flow	Rs m	10,550	121,740	1,053.9%

Current Valuations for HINDALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 16.9, an decline from the EPS of Rs 24.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 95.7, stands at 5.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.4 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 3.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	586.9	531.1
TTM Earnings per share	Rs	24.7	16.9
Diluted earnings per share	Rs	24.5	16.7
Price to Cash Flow	x	4.5	3.8
TTM P/E ratio	x	38.3	5.7
Price / Book Value ratio	x	0.9	0.6
Market Cap	Rs m	500,445	340,692
Dividends per share (Unadj.)	Rs	1.2	1.0

Ratio Analysis for HINDALCO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.8x during FY20, from 1.6x during FY19. 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 deteriorated and stood at 2.4x during FY20, from 3.1x during FY19. 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 6.4% during FY20, from 9.5% during FY20. 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 8.7% during FY20, from 11.2% during FY19. 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 4.7% during FY20, from 6.1% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	1.6	1.8
Debtors’ Days	Days	3	3
Interest coverage	x	3.1	2.4
Debt to equity ratio	x	0.8	1.0
Return on assets	%	6.1	4.7
Return on equity	%	9.5	6.4
Return on capital employed	%	11.2	8.7

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 205.4 to Rs 95.7, registering a loss of Rs 109.7 or around 53.4%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 5,713.3 (up 5.4%). Over the last one year it has moved down from 11,355.1 to 5,713.3, a loss of 5,642 points (down 49.7%).

Overall, the S&P BSE SENSEX is down 24.2% 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