HPCL 2019-20 Annual Report Analysis

Tue, 31 Mar

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 1.3% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 59.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 1.9% in FY20 as against 4.5% 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 46.2% YoY.
• Net profit margins during the year declined from 2.3% in FY19 to 1.2% in FY20.

HPCL Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	2,537,590	2,504,410	-1.3%
Other income	Rs m	14,531	16,816	15.7%
Total Revenues	Rs m	2,552,121	2,521,226	-1.2%
Gross profit	Rs m	115,273	46,596	-59.6%
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	18,325	-79.9%
Tax	Rs m	33,486	-12,644	-137.8%
Profit after tax	Rs m	57,609	30,969	-46.2%
Gross profit margin	%	4.5	1.9
Effective tax rate	%	36.8	-69.0
Net profit margin	%	2.3	1.2

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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 13% and stood at Rs 376 billion, while fixed assets rose 24% and stood at Rs 793 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	570,481	-0.3
Long-term Debt	Rs m	121,278	231,096	90.6
Total Liabilities	Rs m	1,073,465	1,169,099	8.9
Current assets	Rs m	434,900	376,198	-13.5
Fixed Assets	Rs m	638,565	792,901	24.2
Total Assets	Rs m	1,073,465	1,169,099	8.9

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	-

Current Valuations for HPCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 20.3, an decline from the EPS of Rs 37.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 190.2, stands at 8.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.1 times.
• The company's price to cash flow (P/CF) ratio stood at 5.8 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	1,665.3	1,643.5
TTM Earnings per share	Rs	37.8	20.3
Diluted earnings per share	Rs	40.6	21.8
Price to Cash Flow	x	4.5	5.8
TTM P/E ratio	x	6.7	8.7
Price / Book Value ratio	x	1.3	1.2
Market Cap	Rs m	406,480	372,194
Dividends per share (Unadj.)	Rs	15.9	9.8

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 2.6x 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 10.0% during FY20, from 18.9% 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 5.5% during FY20, from 23.3% 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 3.6% during FY20, from 6.1% 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	1	1
Interest coverage	x	12.6	2.6
Debt to equity ratio	x	0.4	0.7
Return on assets	%	6.1	3.6
Return on equity	%	18.9	10.0
Return on capital employed	%	23.3	5.5

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 283.5 to Rs 190.2, registering a loss of Rs 93.4 or around 32.9%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 10,020.9 (up 8.7%). Over the last one year it has moved down from 15,269.7 to 10,020.9, a loss of 5,249 points (down 34.4%).

Overall, the S&P BSE SENSEX is down 24.2% 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