HFCL 2020-21 Annual Report Analysis

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HFCL 2020-21 Annual Report Analysis
Wed, 27 Oct

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 6.1% in FY20 to 5.5% 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 % 6.1 5.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 76.6, stands at 28.2 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 1.5 times, while the price to sales ratio stands at 0.6 times.
  • The company's price to cash flow (P/CF) ratio stood at 31.2 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 1.9 1.9
Price to Cash Flow x 35.1 31.2
TTM P/E ratio x 28.2 28.2
Price / Book Value ratio x 1.3 1.5
Market Cap Rs m 98,319 98,319
Dividends per share (Unadj.) Rs 0.0 0.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 17.0 to Rs 76.6, registering a gain of Rs 59.6 or around 351.6%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 15,425.3 (up 0.8%). Over the last one year it has moved up from 9,739.3 to 15,425.3, a gain of 5,686 points (up 58.4%).

Overall, the S&P BSE SENSEX is up 52.3% over the year.

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

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Related Views on News

HFCL Announces Quarterly Results (2QFY22); Net Profit Up 60.9% (Quarterly Result Update)

Oct 18, 2021 | Updated on Oct 18, 2021

For the quarter ended September 2021, HFCL has posted a net profit of Rs 858 m (up 60.9% YoY). Sales on the other hand came in at Rs 11 bn (up 6.4% YoY). Read on for a complete analysis of HFCL's quarterly results.

HFCL Announces Quarterly Results (1QFY22); Net Profit Up 326.1% (Quarterly Result Update)

Jul 22, 2021 | Updated on Jul 22, 2021

For the quarter ended June 2021, HFCL has posted a net profit of Rs 909 m (up 326.1% YoY). Sales on the other hand came in at Rs 12 bn (up 72.5% YoY). Read on for a complete analysis of HFCL's quarterly results.

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