HFCL 2020-21 Annual Report Analysis

Wed, 31 Mar

HFCL 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.

HFCL Income Statement Analysis

• Operating income during the year rose 15.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 18.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 12.3% in FY21 as against 12.0% in FY20.
• Depreciation charges increased by 63.6% and finance costs increased by 53.4% YoY, respectively.
• Other income declined by 35.2% YoY.
• Net profit for the year grew by 3.3% YoY.
• Net profit margins during the year declined from 6.2% in FY20 to 5.6% in FY21.

HFCL Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	38,389	44,230	15.2%
Other income	Rs m	558	361	-35.2%
Total Revenues	Rs m	38,947	44,591	14.5%
Gross profit	Rs m	4,604	5,455	18.5%
Depreciation	Rs m	420	686	63.6%
Interest	Rs m	1,148	1,761	53.4%
Profit before tax	Rs m	3,594	3,369	-6.3%
Tax	Rs m	1,210	906	-25.1%
Profit after tax	Rs m	2,384	2,462	3.3%
Gross profit margin	%	12.0	12.3
Effective tax rate	%	33.7	26.9
Net profit margin	%	6.2	5.6

Download Now: Exclusive Guide About India's Potentially Decade-Long $10 Trillion Bull Run...

HFCL Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 30 billion as compared to Rs 19 billion in FY20, thereby witnessing an increase of 56.3%.
• Long-term debt stood at Rs 3 billion as compared to Rs 2 billion during FY20, a growth of 24.8%.
• Current assets rose 36% and stood at Rs 41 billion, while fixed assets rose 40% and stood at Rs 11 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 52 billion as against Rs 38 billion during FY20, thereby witnessing a growth of 36%.

HFCL Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	16,568	19,006	14.7
Current Liabilities	Rs m	19,107	29,866	56.3
Long-term Debt	Rs m	2,009	2,508	24.8
Total Liabilities	Rs m	38,168	52,091	36.5
Current assets	Rs m	30,611	41,498	35.6
Fixed Assets	Rs m	7,557	10,593	40.2
Total Assets	Rs m	38,168	52,091	36.5

HFCL Cash Flow Statement Analysis

• HFCL's cash flow from operating activities (CFO) during FY21 stood at Rs 568 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -769 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs 250 million, an improvement of 480% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 49 million from the Rs -11 million net cash flows seen during FY20.

HFCL 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	1,724	568	-67.0%
Cash Flow from Investing Activities	Rs m	-1,669	-769	-
Cash Flow from Financing Activities	Rs m	-66	250	-
Net Cash Flow	Rs m	-11	49	-

Current Valuations for HFCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 1.9, an improvement from the EPS of Rs 1.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 25.2, stands at 14.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.8 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 8.9 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	29.9	34.4
TTM Earnings per share	Rs	1.9	1.9
Diluted earnings per share	Rs	1.7	1.8
Price to Cash Flow	x	4.4	8.9
TTM P/E ratio	x	5.2	14.1
Price / Book Value ratio	x	1.3	1.5
Market Cap	Rs m	20,903	27,871
Dividends per share (Unadj.)	Rs	0.0	0.2

Ratio Analysis for HFCL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.4x during FY21, from 1.6x 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 2.9x during FY21, from 4.1x 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 13.0% during FY21, from 14.4% 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 23.8% during FY21, from 25.5% 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 8.1% during FY21, from 9.3% 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	1.6	1.4
Debtors’ Days	Days	15	22
Interest coverage	x	4.1	2.9
Debt to equity ratio	x	0.1	0.1
Return on assets	%	9.3	8.1
Return on equity	%	14.4	13.0
Return on capital employed	%	25.5	23.8

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

HFCL Share Price Performance

Over the last one year, HFCL share price has moved up from Rs 9.0 to Rs 25.2, registering a gain of Rs 16.2 or around 179.4%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 11,919.9 (down 0.9%). Over the last one year it has moved up from 6,403.4 to 11,919.9, a gain of 5,517 points (up 86.1%).

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

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

Read: Latest Annual Report Analysis of HFCL