HFCL 2022-23 Annual Report Analysis

Mon, 11 Sep

HFCL has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

HFCL Income Statement Analysis

• Operating income during the year rose 0.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 3.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.0% in FY23 as against 13.6% in FY22.
• Depreciation charges increased by 6.0% and finance costs decreased by 8.5% YoY, respectively.
• Other income grew by 10.0% YoY.
• Net profit for the year declined by 2.5% YoY.
• Net profit margins during the year declined from 6.9% in FY22 to 6.7% in FY23.

HFCL Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	47,271	47,433	0.3%
Other income	Rs m	429	472	10.0%
Total Revenues	Rs m	47,700	47,905	0.4%
Gross profit	Rs m	6,439	6,186	-3.9%
Depreciation	Rs m	783	830	6.0%
Interest	Rs m	1,664	1,522	-8.5%
Profit before tax	Rs m	4,421	4,306	-2.6%
Tax	Rs m	1,163	1,129	-2.9%
Profit after tax	Rs m	3,259	3,177	-2.5%
Gross profit margin	%	13.6	13.0
Effective tax rate	%	26.3	26.2
Net profit margin	%	6.9	6.7

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HFCL Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 21 billion as compared to Rs 22 billion in FY22, thereby witnessing an decrease of -1.6%.
• Long-term debt down at Rs 1 billion as compared to Rs 1 billion during FY22, a fall of 9.0%.
• Current assets rose 7% and stood at Rs 41 billion, while fixed assets rose 3% and stood at Rs 14 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 55 billion as against Rs 52 billion during FY22, thereby witnessing a growth of 6%.

HFCL Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	27,965	30,777	10.1
Current Liabilities	Rs m	21,778	21,422	-1.6
Long-term Debt	Rs m	1,213	1,104	-9.0
Total Liabilities	Rs m	51,665	54,726	5.9
Current assets	Rs m	38,193	40,822	6.9
Fixed Assets	Rs m	13,472	13,904	3.2
Total Assets	Rs m	51,665	54,726	5.9

HFCL Cash Flow Statement Analysis

• HFCL's cash flow from operating activities (CFO) during FY23 stood at Rs 2 billion, an improvement of 15.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -446 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 470 million from the Rs -46 million net cash flows seen during FY22.

HFCL Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	2,054	2,364	15.1%
Cash Flow from Investing Activities	Rs m	-4,578	-446	-
Cash Flow from Financing Activities	Rs m	2,479	-1,448	-
Net Cash Flow	Rs m	-46	470	-

Current Valuations for HFCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 2.3, an decline from the EPS of Rs 2.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 77.1, stands at 32.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.6 times, while the price to sales ratio stands at 2.2 times.
• The company's price to cash flow (P/CF) ratio stood at 24.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	34.3	34.4
TTM Earnings per share	Rs	2.4	2.3
Diluted earnings per share	Rs	2.3	2.2
Price to Cash Flow	x	27.8	24.2
TTM P/E ratio	x	34.5	32.5
Price / Book Value ratio	x	3.1	3.1
Market Cap	Rs m	85,695	96,781
Dividends per share (Unadj.)	Rs	0.2	0.2

Ratio Analysis for HFCL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.9x during FY23, from 1.8x during FY22. 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 3.8x during FY23, from 3.7x during FY22. 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 10.3% during FY23, from 11.7% during FY23. 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 18.3% during FY23, from 20.9% during FY22. 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 8.6% during FY23, from 9.5% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.8	1.9
Debtors’ Days	Days	15	15
Interest coverage	x	3.7	3.8
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.5	8.6
Return on equity	%	11.7	10.3
Return on capital employed	%	20.9	18.3

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 down from Rs 79.0 to Rs 77.1, registering a loss of Rs 1.8 or around 2.3%.

Meanwhile, the S&P BSE TECK Index is trading at Rs 14,650.3 (up 0.6%). Over the last one year it has moved up from 13,475.7 to 14,650.3, a gain of 1,175 points (up 8.7%).

Overall, the S&P BSE SENSEX is up 13.4% over the year.

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