HEG 2018-19 Annual Report Analysis

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HEG 2018-19 Annual Report Analysis
Wed, 31 Jul

HEG 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.

HEG Income Statement Analysis

  • Operating income during the year rose 139.7% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 170.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 70.7% in FY19 as against 62.6% in FY18.
  • Depreciation charges decreased by 0.2% and finance costs decreased by 68.1% YoY, respectively.
  • Other income grew by 782.7% YoY.
  • Net profit for the year grew by 175.2% YoY.
  • Net profit margins during the year grew from 39.8% in FY18 to 45.2% in FY19.

HEG Income Statement 2018-19

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Net Sales Rs m 27,501 65,928 139.7%
Other income Rs m 124 1,092 782.7%
Total Revenues Rs m 27,624 67,020 142.6%
Gross profit Rs m 17,213 46,583 170.6%
Depreciation Rs m 726 724 -0.2%
Interest Rs m 564 180 -68.1%
Profit before tax Rs m 16,047 46,771 191.5%
Tax Rs m 5,234 16,266 210.8%
Profit after tax Rs m 10,994 30,262 175.2%
Gross profit margin % 62.6 70.7
Effective tax rate % 32.6 34.8
Net profit margin % 39.8 45.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



HEG Balance Sheet Analysis

  • The company's current liabilities during FY19 stood at Rs 12 billion as compared to Rs 7 billion in FY18, thereby witnessing an increase of 73.5%.
  • Current assets rose 113% and stood at Rs 34 billion, while fixed assets fell 3% and stood at Rs 8 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 51 billion as against Rs 27 billion during FY18, thereby witnessing a growth of 88%.

HEG Balance Sheet as on March 2019

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Networth Rs m 19,075 37,937 98.9
 
Current Liabilities Rs m 7,019 12,179 73.5
Long-term Debt Rs m 0 0 0.0
Total Liabilities Rs m 27,391 51,444 87.8
 
Current assets Rs m 16,149 34,355 112.7
Fixed Assets Rs m 8,346 8,066 -3.4
Total Assets Rs m 27,391 51,444 87.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



HEG Cash Flow Statement Analysis

  • HEG's cash flow from operating activities (CFO) during FY19 stood at Rs 15 billion, an improvement of 146.7% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY19 stood at Rs -7 billion, an improvement of 7,020.7% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY19 stood at Rs -8 billion on a YoY basis.
  • Overall, net cash flows for the company during FY19 stood at Rs 240 million from the Rs -31 million net cash flows seen during FY18.

HEG 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 5,941 14,654 146.7%
Cash Flow from Investing Activities Rs m -92 -6,530 -
Cash Flow from Financing Activities Rs m -5,880 -7,885 -
Net Cash Flow Rs m -31 240 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for HEG

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 784.2, an improvement from the EPS of Rs 275.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 981.1, stands at 1.4 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.5 times, while the price to sales ratio stands at 2.0 times.
  • The company's price to cash flow (P/CF) ratio stood at 1.4 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 688.2 1,708.4
TTM Earnings per share Rs 275.1 784.2
Diluted earnings per share Rs 248.1 682.8
Price to Cash Flow x 3.4 1.4
TTM P/E ratio x 1.3 1.4
Price / Book Value ratio x 3.9 3.5
Market Cap Rs m 39,205 43,482
Dividends per share (Unadj.) Rs 50.0 80.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for HEG

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 2.8x during FY19, from 2.3x 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 261.3x during FY19, from 29.4x 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 improved and stood at 79.8% during FY19, from 57.6% 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 improved and stood at 123.1% during FY19, from 88.0% 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 improved and stood at 59.2% during FY19, from 42.2% 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 2.3 2.8
Debtors’ Days Days 129 66
Interest coverage x 29.4 261.3
Debt to equity ratio x 0.0 0.0
Return on assets % 42.2 59.2
Return on equity % 57.6 79.8
Return on capital employed % 88.0 123.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

HEG Share Price Performance

Over the last one year, HEG share price has moved down from Rs 4,306.1 to Rs 981.1, registering a loss of Rs 3,325.0 or around 77.2%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 17,459.1 (up 0.2%). Over the last one year it has moved down from 18,295.6 to 17,459.1, a loss of 837 points (down 4.6%).

Overall, the S&P BSE SENSEX is down 0.4% over the year.

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

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