HPCL 2017-18 Annual Report Analysis

Sat, 31 Mar

HPCL has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

HPCL Income Statement Analysis

• Operating income during the year rose 21.2% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 1.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 5.5% in FY18 as against 6.8% in FY17.
• Depreciation charges increased by 2.1% and finance costs increased by 1.4% YoY, respectively.
• Other income grew by 12.6% YoY.
• Net profit for the year declined by 0.3% YoY.
• Net profit margins during the year declined from 3.7% in FY17 to 3.0% in FY18.

HPCL Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	1,606,971	1,947,574	21.2%
Other income	Rs m	13,844	15,593	12.6%
Total Revenues	Rs m	1,620,815	1,963,167	21.1%
Gross profit	Rs m	108,797	106,815	-1.8%
Depreciation	Rs m	27,764	28,344	2.1%
Interest	Rs m	6,092	6,179	1.4%
Profit before tax	Rs m	88,784	87,886	-1.0%
Tax	Rs m	29,616	28,919	-2.4%
Profit after tax	Rs m	59,168	58,967	-0.3%
Gross profit margin	%	6.8	5.5
Effective tax rate	%	33.4	32.9
Net profit margin	%	3.7	3.0

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HPCL Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 476 billion as compared to Rs 458 billion in FY17, thereby witnessing an increase of 3.9%.
• Long-term debt stood at Rs 97 billion as compared to Rs 71 billion during FY17, a growth of 35.7%.
• Current assets rose 10% and stood at Rs 365 billion, while fixed assets rose 12% and stood at Rs 531 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 897 billion as against Rs 803 billion during FY17, thereby witnessing a growth of 12%.

HPCL Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	210,714	255,324	21.2
Current Liabilities	Rs m	457,732	475,630	3.9
Long-term Debt	Rs m	71,178	96,559	35.7
Total Liabilities	Rs m	803,190	896,718	11.6
Current assets	Rs m	330,661	365,331	10.5
Fixed Assets	Rs m	472,530	531,387	12.5
Total Assets	Rs m	803,190	896,718	11.6

HPCL Cash Flow Statement Analysis

• HPCL's cash flow from operating activities (CFO) during FY18 stood at Rs 110 billion, an improvement of 7.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -74 billion, an improvement of 39.5% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -44 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -8 billion from the Rs 7 billion net cash flows seen during FY17.

HPCL Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	102,545	110,372	7.6%
Cash Flow from Investing Activities	Rs m	-53,040	-73,980	-
Cash Flow from Financing Activities	Rs m	-42,387	-44,230	-
Net Cash Flow	Rs m	7,117	-7,837	-

Current Valuations for HPCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 38.7, an decline from the EPS of Rs 58.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 344.2, stands at 7.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.9 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at 7.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	1,581.9	1,278.1
TTM Earnings per share	Rs	58.2	38.7
Diluted earnings per share	Rs	41.7	41.6
Price to Cash Flow	x	8.6	7.8
TTM P/E ratio	x	12.0	7.7
Price / Book Value ratio	x	4.1	2.7
Market Cap	Rs m	873,150	684,806
Dividends per share (Unadj.)	Rs	30.0	17.0

Ratio Analysis for HPCL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.8x during FY18, from 0.7x during FY17. 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 15.2x during FY18, from 15.6x during FY17. 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 23.1% during FY18, from 28.1% during FY18. 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 26.7% during FY18, from 33.7% during FY17. 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 7.3% during FY18, from 8.1% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	0.7	0.8
Debtors’ Days	Days	1	1
Interest coverage	x	15.6	15.2
Debt to equity ratio	x	0.3	0.4
Return on assets	%	8.1	7.3
Return on equity	%	28.1	23.1
Return on capital employed	%	33.7	26.7

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

HPCL Share Price Performance

Over the last one year, HPCL share price has moved down from Rs 525.5 to Rs 344.2, registering a loss of Rs 181.3 or around 34.5%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 14,614.4 (up 0.1%). Over the last one year it has moved up from 13,563.6 to 14,614.4, a gain of 1,051 points (up 7.7%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of HPCL