HPCL 2018-19 Annual Report Analysis

Sun, 31 Mar

HPCL has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

HPCL Income Statement Analysis

• Operating income during the year rose 30.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 4.5% in FY19 as against 5.5% in FY18.
• Depreciation charges increased by 8.9% and finance costs increased by 27.2% YoY, respectively.
• Other income declined by 6.8% YoY.
• Net profit for the year declined by 2.3% YoY.
• Net profit margins during the year declined from 3.0% in FY18 to 2.3% in FY19.

HPCL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	1,947,574	2,537,590	30.3%
Other income	Rs m	15,593	14,531	-6.8%
Total Revenues	Rs m	1,963,167	2,552,121	30.0%
Gross profit	Rs m	106,815	115,273	7.9%
Depreciation	Rs m	28,344	30,853	8.9%
Interest	Rs m	6,179	7,856	27.2%
Profit before tax	Rs m	87,886	91,095	3.7%
Tax	Rs m	28,919	33,486	15.8%
Profit after tax	Rs m	58,967	57,609	-2.3%
Gross profit margin	%	5.5	4.5
Effective tax rate	%	32.9	36.8
Net profit margin	%	3.0	2.3

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HPCL Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 572 billion as compared to Rs 476 billion in FY18, thereby witnessing an increase of 20.3%.
• Long-term debt stood at Rs 121 billion as compared to Rs 97 billion during FY18, a growth of 25.6%.
• Current assets rose 19% and stood at Rs 435 billion, while fixed assets rose 20% and stood at Rs 639 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 1,073 billion as against Rs 897 billion during FY18, thereby witnessing a growth of 20%.

HPCL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	255,324	304,007	19.1
Current Liabilities	Rs m	475,630	572,099	20.3
Long-term Debt	Rs m	96,559	121,278	25.6
Total Liabilities	Rs m	896,718	1,073,465	19.7
Current assets	Rs m	365,331	434,900	19.0
Fixed Assets	Rs m	531,387	638,565	20.2
Total Assets	Rs m	896,718	1,073,465	19.7

HPCL Cash Flow Statement Analysis

• HPCL's cash flow from operating activities (CFO) during FY19 stood at Rs 86 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -114 billion, an improvement of 53.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 26 billion, an improvement of 159% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -2 billion from the Rs -8 billion net cash flows seen during FY18.

HPCL Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	110,372	85,540	-22.5%
Cash Flow from Investing Activities	Rs m	-73,980	-113,817	-
Cash Flow from Financing Activities	Rs m	-44,230	25,982	-
Net Cash Flow	Rs m	-7,837	-2,295	-

Current Valuations for HPCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 37.8, an decline from the EPS of Rs 38.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 283.5, stands at 6.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 4.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	1,278.1	1,665.3
TTM Earnings per share	Rs	38.7	37.8
Diluted earnings per share	Rs	41.6	40.6
Price to Cash Flow	x	5.6	4.6
TTM P/E ratio	x	7.7	6.7
Price / Book Value ratio	x	2.7	1.3
Market Cap	Rs m	684,806	406,480
Dividends per share (Unadj.)	Rs	17.0	15.9

Ratio Analysis for HPCL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY19, from 0.8x during FY18. 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 12.6x during FY19, from 15.2x during FY18. 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 18.9% during FY19, from 23.1% during FY19. 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 23.3% during FY19, from 26.7% during FY18. 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 6.1% during FY19, from 7.3% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	0.8	0.8
Debtors’ Days	Days	1	1
Interest coverage	x	15.2	12.6
Debt to equity ratio	x	0.4	0.4
Return on assets	%	7.3	6.1
Return on equity	%	23.1	18.9
Return on capital employed	%	26.7	23.3

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 344.2 to Rs 283.5, registering a loss of Rs 60.7 or around 17.6%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 15,269.7 (up 0.9%). Over the last one year it has moved up from 14,614.4 to 15,269.7, a gain of 655 points (up 4.5%).

Overall, the S&P BSE SENSEX is up 16.3% 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