HINDALCO 2020-21 Annual Report Analysis

Wed, 31 Mar

HINDALCO has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

HINDALCO Income Statement Analysis

• Operating income during the year rose 18.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 5.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 10.4% in FY21 as against 11.7% in FY20.
• Depreciation charges increased by 30.2% and finance costs decreased by 10.6% YoY, respectively.
• Other income grew by 20.8% YoY.
• Net profit for the year declined by 7.6% YoY.
• Net profit margins during the year declined from 3.2% in FY20 to 2.5% in FY21.

HINDALCO Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	1,181,440	1,399,330	18.4%
Other income	Rs m	13,960	16,870	20.8%
Total Revenues	Rs m	1,195,400	1,416,200	18.5%
Gross profit	Rs m	138,120	145,270	5.2%
Depreciation	Rs m	50,910	66,280	30.2%
Interest	Rs m	41,970	37,520	-10.6%
Profit before tax	Rs m	59,200	58,340	-1.5%
Tax	Rs m	21,570	23,560	9.2%
Profit after tax	Rs m	37,630	34,780	-7.6%
Gross profit margin	%	11.7	10.4
Effective tax rate	%	36.4	40.4
Net profit margin	%	3.2	2.5

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HINDALCO Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 485 billion as compared to Rs 372 billion in FY20, thereby witnessing an increase of 30.3%.
• Long-term debt stood at Rs 590 billion as compared to Rs 584 billion during FY20, a growth of 1.0%.
• Current assets rose 2% and stood at Rs 676 billion, while fixed assets rose 18% and stood at Rs 1,212 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 1,888 billion as against Rs 1,686 billion during FY20, thereby witnessing a growth of 12%.

HINDALCO Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	584,030	666,080	14.0
Current Liabilities	Rs m	372,170	484,930	30.3
Long-term Debt	Rs m	583,790	589,850	1.0
Total Liabilities	Rs m	1,686,180	1,888,120	12.0
Current assets	Rs m	662,820	676,280	2.0
Fixed Assets	Rs m	1,023,360	1,211,840	18.4
Total Assets	Rs m	1,686,180	1,888,120	12.0

HINDALCO Cash Flow Statement Analysis

• HINDALCO's cash flow from operating activities (CFO) during FY21 stood at Rs 172 billion, an improvement of 35.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -256 billion, an improvement of 204.2% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -49 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -129 billion from the Rs 122 billion net cash flows seen during FY20.

HINDALCO Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	127,450	172,320	35.2%
Cash Flow from Investing Activities	Rs m	-84,270	-256,370	-
Cash Flow from Financing Activities	Rs m	66,560	-48,820	-
Net Cash Flow	Rs m	121,740	-129,300	-

Current Valuations for HINDALCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.6, an decline from the EPS of Rs 16.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 326.9, stands at 14.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.1 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 5.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	531.1	628.9
TTM Earnings per share	Rs	16.9	15.6
Diluted earnings per share	Rs	16.7	15.5
Price to Cash Flow	x	2.4	5.0
TTM P/E ratio	x	5.7	14.2
Price / Book Value ratio	x	0.6	0.8
Market Cap	Rs m	340,692	500,311
Dividends per share (Unadj.)	Rs	1.0	3.0

Ratio Analysis for HINDALCO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.4x during FY21, from 1.8x during FY20. 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 FY21, from 2.4x during FY20. 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 5.2% during FY21, from 6.4% during FY21. 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 7.6% during FY21, from 8.7% during FY20. 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 3.8% during FY21, from 4.7% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.8	1.4
Debtors’ Days	Days	3	3
Interest coverage	x	2.4	2.6
Debt to equity ratio	x	1.0	0.9
Return on assets	%	4.7	3.8
Return on equity	%	6.4	5.2
Return on capital employed	%	8.7	7.6

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 95.7 to Rs 326.9, registering a gain of Rs 231.2 or around 241.7%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 14,350.6 (up 0.4%). Over the last one year it has moved up from 5,713.3 to 14,350.6, a gain of 8,637 points (up 151.2%).

Overall, the S&P BSE SENSEX is up 74.1% 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