HPCL 2019-20 Annual Report Analysis

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HPCL 2019-20 Annual Report Analysis
Mon, 23 Nov

HPCL has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

HPCL Income Statement Analysis

  • Operating income during the year fell 2.3% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 50.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 2.1% in FY20 as against 4.2% in FY19.
  • Depreciation charges increased by 9.2% and finance costs increased by 45.0% YoY, respectively.
  • Other income grew by 15.7% YoY.
  • Net profit for the year declined by 60.6% YoY.
  • Net profit margins during the year declined from 2.4% in FY19 to 1.0% in FY20.

HPCL Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 2,754,906 2,690,915 -2.3%
Other income Rs m 14,531 16,816 15.7%
Total Revenues Rs m 2,769,438 2,707,732 -2.2%
Gross profit Rs m 115,273 56,625 -50.9%
Depreciation Rs m 30,853 33,699 9.2%
Interest Rs m 7,856 11,389 45.0%
Profit before tax Rs m 91,095 28,354 -68.9%
Tax Rs m 33,486 -12,644 -137.8%
Profit after tax Rs m 66,906 26,387 -60.6%
Gross profit margin % 4.2 2.1
Effective tax rate % 36.8 -44.6
Net profit margin % 2.4 1.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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HPCL Balance Sheet Analysis

  • The company's current liabilities during FY20 down at Rs 570 billion as compared to Rs 572 billion in FY19, thereby witnessing an decrease of -0.3%.
  • Long-term debt stood at Rs 231 billion as compared to Rs 121 billion during FY19, a growth of 90.6%.
  • Current assets fell 14% and stood at Rs 376 billion, while fixed assets rose 29% and stood at Rs 661 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 1,169 billion as against Rs 1,073 billion during FY19, thereby witnessing a growth of 9%.

HPCL Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 304,007 309,806 1.9
 
Current Liabilities Rs m 572,099 570,444 -0.3
Long-term Debt Rs m 121,278 231,096 90.6
Total Liabilities Rs m 1,073,465 1,169,062 8.9
 
Current assets Rs m 434,900 376,178 -13.5
Fixed Assets Rs m 511,435 661,215 29.3
Total Assets Rs m 1,073,465 1,169,062 8.9
* 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 FY20 stood at Rs 55 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs -142 billion, an improvement of 24.5% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs 85 billion, an improvement of 225% on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs -2 billion from the Rs -2 billion net cash flows seen during FY19.

HPCL Cash Flow Statement 2019-20

Particulars No. of months 12 12 % Change
Year Ending Mar-19 Mar-20
Cash Flow from Operating Activities Rs m 85,540 54,692 -36.1%
Cash Flow from Investing Activities Rs m -113,817 -141,679 -
Cash Flow from Financing Activities Rs m 25,982 84,520 225.3%
Net Cash Flow Rs m -2,295 -2,467 -
* 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 17.3, an decline from the EPS of Rs 43.9 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 213.7, stands at 5.4 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.1 times.
  • The company's price to cash flow (P/CF) ratio stood at 5.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Sales per share (Unadj.) Rs 1,807.1 1,765.1
TTM Earnings per share Rs 43.9 17.3
Diluted earnings per share Rs 43.9 17.3
Price to Cash Flow x 3.7 5.0
TTM P/E ratio x 5.4 5.4
Price / Book Value ratio x 1.3 1.2
Market Cap Rs m 325,716 325,443
Dividends per share (Unadj.) Rs 15.9 9.8
* 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 deteriorated and stood at 0.7x during FY20, from 0.8x during FY19. 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 3.5x during FY20, from 12.6x during FY19. 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 8.5% during FY20, from 22.0% during FY20. 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 4.6% during FY20, from 25.5% during FY19. 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 3.2% during FY20, from 7.0% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Current ratio x 0.8 0.7
Debtors’ Days Days 8 5
Interest coverage x 12.6 3.5
Debt to equity ratio x 0.4 0.7
Return on assets % 7.0 3.2
Return on equity % 22.0 8.5
Return on capital employed % 25.5 4.6
* 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 down from Rs 290.4 to Rs 213.7, registering a loss of Rs 76.7 or around 26.4%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 13,060.3 (up 1.1%). Over the last one year it has moved down from 15,110.1 to 13,060.3, a loss of 2,050 points (down 13.6%).

Overall, the S&P BSE SENSEX is up 8.4% over the year.

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

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