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HEG 2020-21 Annual Report Analysis
Wed, 31 Mar

HEG 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.

HEG Income Statement Analysis

  • Operating income during the year fell 41.5% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 915.7% YoY during the fiscal. Operating profit margins witnessed a growth and stood at 4.7% in FY21 as against 0.3% in FY20.
  • Depreciation charges increased by 1.4% and finance costs decreased by 68.9% YoY, respectively.
  • Other income declined by 21.5% YoY.
  • Net profit for the year declined by 147.4% YoY.
  • Net profit margins during the year declined from 2.5% in FY20 to 2.0% in FY21.

HEG Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 21,490 12,562 -41.5%
Other income Rs m 1,438 1,129 -21.5%
Total Revenues Rs m 22,928 13,691 -40.3%
Gross profit Rs m -58 -592 915.7%
Depreciation Rs m 721 731 1.4%
Interest Rs m 365 114 -68.9%
Profit before tax Rs m 293 -308 -205.0%
Tax Rs m -241 -55 -77.3%
Profit after tax Rs m 534 -253 -147.4%
Gross profit margin % -0.3 -4.7
Effective tax rate % -82.2 17.7
Net profit margin % 2.5 -2.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



War Profits: A Potential 33x Opportunity by 2030

HEG Balance Sheet Analysis

  • The company's current liabilities during FY21 down at Rs 6 billion as compared to Rs 8 billion in FY20, thereby witnessing an decrease of -21.1%.
  • Current assets rose 1% and stood at Rs 21 billion, while fixed assets fell 9% and stood at Rs 22 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 42 billion as against Rs 44 billion during FY20, thereby witnessing a fall of 4%.

HEG Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 35,117 34,951 -0.5
 
Current Liabilities Rs m 8,165 6,440 -21.1
Long-term Debt Rs m 0 0 0.0
Total Liabilities Rs m 44,384 42,442 -4.4
 
Current assets Rs m 20,589 20,736 0.7
Fixed Assets Rs m 23,795 21,705 -8.8
Total Assets Rs m 44,384 42,442 -4.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



HEG Cash Flow Statement Analysis

  • HEG's cash flow from operating activities (CFO) during FY21 stood at Rs 7 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -4 billion, an improvement of 56.2% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -3 billion, an improvement of 33% on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs -114 million from the Rs 36 million net cash flows seen during FY20.

HEG 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 7,387 7,287 -1.4%
Cash Flow from Investing Activities Rs m -2,754 -4,303 -
Cash Flow from Financing Activities Rs m -4,596 -3,098 -
Net Cash Flow Rs m 36 -114 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for HEG

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs -6.6, an decline from the EPS of Rs 13.8 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,464.2, stands at -223.6 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 1.6 times, while the price to sales ratio stands at 4.5 times.
  • The company's price to cash flow (P/CF) ratio stood at 87.5 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 556.7 325.4
TTM Earnings per share Rs 13.8 -6.6
Diluted earnings per share Rs 13.8 -6.6
Price to Cash Flow x 14.9 87.5
TTM P/E ratio x 35.1 -223.6
Price / Book Value ratio x 1.4 1.2
Market Cap Rs m 49,936 41,853
Dividends per share (Unadj.) Rs 25.0 3.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for HEG

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 3.2x during FY21, from 2.5x 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 deteriorated and stood at -1.7x during FY21, from 1.8x 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 -0.7% during FY21, from 1.5% 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 -0.6% during FY21, from 1.9% 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 -0.3% during FY21, from 2.0% 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 2.5 3.2
Debtors’ Days Days 678 841
Interest coverage x 1.8 -1.7
Debt to equity ratio x 0.0 0.0
Return on assets % 2.0 -0.3
Return on equity % 1.5 -0.7
Return on capital employed % 1.9 -0.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 up from Rs 484.8 to Rs 1,464.2, registering a gain of Rs 979.4 or around 202.0%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 21,095.8 (down 0.4%). Over the last one year it has moved up from 10,979.5 to 21,095.8, a gain of 10,116 points (up 92.1%).

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

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

Annual Report FAQs

What is the current share price of HEG?

HEG currently trades at Rs 1,237.4 per share. You can check out the latest share price performance of HEG here...

What was the revenue of HEG in FY21? How does it compare to earlier years?

The revenues of HEG stood at Rs 13,691 m in FY21, which was down -40.3% compared to Rs 22,928 m reported in FY20.

HEG's revenue has grown from Rs 8,317 m in FY17 to Rs 13,691 m in FY21.

Over the past 5 years, the revenue of HEG has grown at a CAGR of 13.3%.

What was the net profit of HEG in FY21? How does it compare to earlier years?

The net loss of HEG stood at Rs -253 m in FY21, which was down -147.4% compared to Rs 534 m reported in FY20.

This compares to a net profit of Rs 30,504 m in FY19 and a net profit of Rs 10,813 m in FY18.

Over the past 5 years, HEG net profit has grown at a CAGR of -15.7%.

What does the cash flow statement of HEG reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of HEG reveals:

  • Cash flow from operations decreased in FY21 and stood at Rs 7,287 m as compared to Rs 7,387 m in FY20.
  • Cash flow from investments decreased in FY21 and stood at Rs -4,303 m as compared to Rs -2,754 m in FY20.
  • Cash flow from financial activity increased in FY21 and stood at Rs -3,098 m as compared to Rs -4,596 m in FY20.

Here's the cash flow statement of HEG for the past 5 years.

(Rs m)FY17FY18FY19FY20FY21
From Operations1,5705,94114,8827,3877,287
From Investments-14-92-6,758-2,754-4,303
From Financial Activity-1,526-5,880-7,885-4,596-3,098
Net Cashflow31-3124036-114

What does the Key Ratio analysis of HEG reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of HEG reveals:

  • Operating profit margins witnessed a growth and stood at 4.7% in FY21 as against 0.3% in FY20.
  • Net profit margins declined from 2.5% in FY20 to 2.0% in FY21.
  • Debt to Equity ratio for FY21 stood at 0.0 as compared to 0.0 in FY20.

Here's the ratio/financial analysis of HEG for the past 5 years.

 FY17FY18FY19FY20FY21
Operating Profit Margin (%)9.762.070.7-0.3-4.7
Net Profit Margin (%)-6.139.446.32.5-2.0
Debt to Equity Ratio (x)0.10.00.00.00.0

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