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HPCL 2017-18 Annual Report Analysis

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HPCL 2017-18 Annual Report Analysis
Tue, 1 Jan

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 17.1% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 1.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 4.9% in FY18 as against 5.8% in FY17.
  • Depreciation charges increased by 2.1% and finance costs increased by 1.4% YoY, respectively.
  • Other income grew by 10.4% YoY.
  • Net profit for the year declined by 12.4% YoY.
  • Net profit margins during the year declined from 4.4% in FY17 to 3.3% in FY18.

HPCL Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 1,874,929 2,195,096 17.1%
Other income Rs m 13,844 15,279 10.4%
Total Revenues Rs m 1,888,773 2,210,375 17.0%
Gross profit Rs m 108,797 107,130 -1.5%
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 82,358 72,183 -12.4%
Gross profit margin % 5.8 4.9
Effective tax rate % 33.4 32.9
Net profit margin % 4.4 3.3
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 12% and stood at Rs 371 billion, while fixed assets rose 10% and stood at Rs 422 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 210,345 255,159 21.3
 
Current Liabilities Rs m 457,732 475,645 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 330,661 371,410 12.3
Fixed Assets Rs m 382,331 422,147 10.4
Total Assets Rs m 803,190 896,718 11.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for HPCL

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 47.3, an decline from the EPS of Rs 81.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 254.0, stands at 5.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.7 times, while the price to sales ratio stands at 0.3 times.
  • The company's price to cash flow (P/CF) ratio stood at 4.4 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 1,845.6 1,439.9
TTM Earnings per share Rs 81.1 47.3
Diluted earnings per share Rs 54.1 47.4
Price to Cash Flow x 3.0 4.4
TTM P/E ratio x 4.0 5.9
Price / Book Value ratio x 3.6 2.7
Market Cap Rs m 258,034 386,907
Dividends per share (Unadj.) Rs 30.0 17.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 28.3% during FY18, from 39.2% 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 30.5% during FY18, from 41.9% 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 8.7% during FY18, from 11.0% 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 8 9
Interest coverage x 15.6 15.2
Debt to equity ratio x 0.3 0.4
Return on assets % 11.0 8.7
Return on equity % 39.2 28.3
Return on capital employed % 41.9 30.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 up from Rs 416.3 to Rs 254.0, registering a loss of Rs 162.3 or around 39.0%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 13,729.0 (down 0.1%). Over the last one year it has moved down from 16,283.3 to 13,729.0, a loss of 2,554 points (down 15.7%).

Overall, the S&P BSE SENSEX is up 6.3% over the year.

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

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