HEG 2021-22 Annual Report Analysis

Sat, 20 Aug

HEG 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.

HEG Income Statement Analysis

• Operating income during the year rose 75.3% on a year-on-year (YoY) basis.
• The company's operating profit was by NA YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.9% in FY22 as against 4.7% in FY21.
• Depreciation charges increased by 8.4% and finance costs decreased by 34.1% YoY, respectively.
• Other income declined by 29.5% YoY.
• Net profit for the year declined by NA YoY.
• Net profit margins during the year grew from 2.0% in FY21 to 17.7% in FY22.

HEG Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	12,562	22,016	75.3%
Other income	Rs m	1,129	795	-29.5%
Total Revenues	Rs m	13,691	22,812	66.6%
Gross profit	Rs m	-592	5,272	NA
Depreciation	Rs m	731	793	8.4%
Interest	Rs m	114	75	-34.1%
Profit before tax	Rs m	-308	5,200	NA
Tax	Rs m	-55	1,294	NA
Profit after tax	Rs m	-253	3,906	NA
Gross profit margin	%	-4.7	23.9
Effective tax rate	%	17.7	24.9
Net profit margin	%	-2.0	17.7

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HEG Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 13 billion as compared to Rs 6 billion in FY21, thereby witnessing an increase of 99.8%.
• Current assets rose 45% and stood at Rs 30 billion, while fixed assets rose 6% and stood at Rs 23 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 53 billion as against Rs 42 billion during FY21, thereby witnessing a growth of 25%.

HEG Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	34,951	39,136	12.0
Current Liabilities	Rs m	6,440	12,871	99.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	42,442	53,079	25.1
Current assets	Rs m	20,736	30,070	45.0
Fixed Assets	Rs m	21,705	23,009	6.0
Total Assets	Rs m	42,442	53,079	25.1

HEG Cash Flow Statement Analysis

• HEG's cash flow from operating activities (CFO) during FY22 stood at Rs -1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs 3 billion, an improvement of 211% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 197 million from the Rs -114 million net cash flows seen during FY21.

HEG 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	7,158	-1,406	-
Cash Flow from Investing Activities	Rs m	-4,174	-1,834	-
Cash Flow from Financing Activities	Rs m	-3,098	3,436	-
Net Cash Flow	Rs m	-114	197	-

Current Valuations for HEG

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 101.2, an improvement from the EPS of Rs -6.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,347.8, stands at 11.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 2.4 times.
• The company's price to cash flow (P/CF) ratio stood at 15.0 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	325.4	570.4
TTM Earnings per share	Rs	-6.6	101.2
Diluted earnings per share	Rs	-6.6	101.2
Price to Cash Flow	x	118.2	15.0
TTM P/E ratio	x	-223.6	11.1
Price / Book Value ratio	x	1.2	1.8
Market Cap	Rs m	41,853	70,570
Dividends per share (Unadj.)	Rs	3.0	40.0

Ratio Analysis for HEG

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.3x during FY22, from 3.2x 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 70.4x during FY22, from -1.7x 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 improved and stood at 10.0% during FY22, from -0.7% 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 13.5% during FY22, from -0.6% 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 7.5% during FY22, from -0.3% 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	3.2	2.3
Debtors’ Days	Days	841	977
Interest coverage	x	-1.7	70.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	-0.3	7.5
Return on equity	%	-0.7	10.0
Return on capital employed	%	-0.6	13.5

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 2,256.7 to Rs 1,347.8, registering a loss of Rs 908.9 or around 40.3%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 31,496.7 (up 0.3%). Over the last one year it has moved up from 23,548.5 to 31,496.7, a gain of 7,948 points (up 33.8%).

Overall, the S&P BSE SENSEX is up 7.2% over the year.

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

Read: Latest Annual Report Analysis of HEG