HCC 2021-22 Annual Report Analysis

Sat, 17 Sep

HCC has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

HCC Income Statement Analysis

• Operating income during the year rose 29.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 733.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.3% in FY22 as against 2.2% in FY21.
• Depreciation charges increased by 2.1% and finance costs increased by 2.9% YoY, respectively.
• Other income grew by 75.7% YoY.
• Net profit for the year declined by NA YoY.
• Net profit margins during the year grew from 7.4% in FY21 to 3.9% in FY22.

HCC Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	82,484	106,697	29.4%
Other income	Rs m	866	1,521	75.7%
Total Revenues	Rs m	83,350	108,219	29.8%
Gross profit	Rs m	1,826	15,228	733.7%
Depreciation	Rs m	1,355	1,383	2.1%
Interest	Rs m	10,011	10,305	2.9%
Profit before tax	Rs m	-8,674	5,061	NA
Tax	Rs m	-2,573	864	NA
Profit after tax	Rs m	-6,100	4,197	NA
Gross profit margin	%	2.2	14.3
Effective tax rate	%	29.7	17.1
Net profit margin	%	-7.4	3.9

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HCC Balance Sheet Analysis

• The company's current liabilities during FY22 down at Rs 81 billion as compared to Rs 108 billion in FY21, thereby witnessing an decrease of -24.8%.
• Long-term debt down at Rs 12 billion as compared to Rs 14 billion during FY21, a fall of 16.3%.
• Current assets fell 19% and stood at Rs 85 billion, while fixed assets fell 20% and stood at Rs 13 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 135 billion as against Rs 120 billion during FY21, thereby witnessing a growth of 12%.

HCC Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	-13,176	-7,846	NA
Current Liabilities	Rs m	107,767	80,996	-24.8
Long-term Debt	Rs m	14,083	11,785	-16.3
Total Liabilities	Rs m	120,295	134,529	11.8
Current assets	Rs m	104,154	84,551	-18.8
Fixed Assets	Rs m	16,076	12,788	-20.5
Total Assets	Rs m	120,295	134,529	11.8

HCC Cash Flow Statement Analysis

• HCC's cash flow from operating activities (CFO) during FY22 stood at Rs 8 billion, an improvement of 116.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -2 billion, an improvement of 200.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -7 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 788 million from the Rs 4 billion net cash flows seen during FY21.

HCC Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	3,479	7,527	116.3%
Cash Flow from Investing Activities	Rs m	-746	-2,243	-
Cash Flow from Financing Activities	Rs m	1,008	-6,599	-
Net Cash Flow	Rs m	3,660	788	-78.5%

Current Valuations for HCC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 2.8, an improvement from the EPS of Rs -4.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 13.0, stands at -49.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at -2.5 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 3.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	54.5	70.5
TTM Earnings per share	Rs	-4.0	2.8
Diluted earnings per share	Rs	-4.0	2.8
Price to Cash Flow	x	-2.6	3.7
TTM P/E ratio	x	-1.8	-49.1
Price / Book Value ratio	x	-0.8	-2.6
Market Cap	Rs m	11,151	20,449
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for HCC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x during FY22, from 1.0x during FY21. 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 1.5x during FY22, from 0.1x during FY21. 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 -53.5% during FY22, from 46.3% during FY22. 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 390.2% during FY22, from 147.4% during FY21. 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 10.8% during FY22, from 3.3% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	1.0	1.0
Debtors’ Days	Days	20	7
Interest coverage	x	0.1	1.5
Debt to equity ratio	x	-1.1	-1.5
Return on assets	%	3.3	10.8
Return on equity	%	46.3	-53.5
Return on capital employed	%	147.4	390.2

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

HCC Share Price Performance

Over the last one year, HCC share price has moved up from Rs 10.1 to Rs 13.0, registering a gain of Rs 2.9 or around 28.6%.

Meanwhile, the S&P BSE REALTY Index is trading at Rs 3,622.1 (down 3.5%). Over the last one year it has moved up from 3,299.3 to 3,622.1, a gain of 323 points (up 9.8%).

Overall, the S&P BSE SENSEX is up 0.2% over the year.

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

Read: Latest Annual Report Analysis of HCC