HPCL 2020-21 Annual Report Analysis

Wed, 31 Mar

HPCL has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

HPCL Income Statement Analysis

• Operating income during the year fell 21.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 243.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 8.2% in FY21 as against 1.9% in FY20.
• Depreciation charges increased by 7.6% and finance costs decreased by 15.4% YoY, respectively.
• Other income grew by 57.2% YoY.
• Net profit for the year grew by 239.8% YoY.
• Net profit margins during the year grew from 1.2% in FY20 to 5.4% in FY21.

HPCL Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	2,504,410	1,959,189	-21.8%
Other income	Rs m	16,816	26,437	57.2%
Total Revenues	Rs m	2,521,226	1,985,627	-21.2%
Gross profit	Rs m	46,596	160,034	243.5%
Depreciation	Rs m	33,699	36,255	7.6%
Interest	Rs m	11,389	9,633	-15.4%
Profit before tax	Rs m	18,325	140,583	667.2%
Tax	Rs m	-12,644	35,341	-379.5%
Profit after tax	Rs m	30,969	105,242	239.8%
Gross profit margin	%	1.9	8.2
Effective tax rate	%	-69.0	25.1
Net profit margin	%	1.2	5.4

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HPCL Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 624 billion as compared to Rs 570 billion in FY20, thereby witnessing an increase of 9.3%.
• Long-term debt stood at Rs 278 billion as compared to Rs 231 billion during FY20, a growth of 20.1%.
• Current assets rose 17% and stood at Rs 442 billion, while fixed assets rose 13% and stood at Rs 900 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 1,342 billion as against Rs 1,169 billion during FY20, thereby witnessing a growth of 15%.

HPCL Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	309,806	380,809	22.9
Current Liabilities	Rs m	570,481	623,803	9.3
Long-term Debt	Rs m	231,096	277,644	20.1
Total Liabilities	Rs m	1,169,099	1,341,597	14.8
Current assets	Rs m	376,198	441,671	17.4
Fixed Assets	Rs m	792,901	899,926	13.5
Total Assets	Rs m	1,169,099	1,341,597	14.8

HPCL Cash Flow Statement Analysis

• HPCL's cash flow from operating activities (CFO) during FY21 stood at Rs 178 billion, an improvement of 226.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -123 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -47 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 8 billion from the Rs -2 billion net cash flows seen during FY20.

HPCL Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	54,692	178,293	226.0%
Cash Flow from Investing Activities	Rs m	-141,679	-122,786	-
Cash Flow from Financing Activities	Rs m	84,520	-47,092	-
Net Cash Flow	Rs m	-2,467	8,415	-

Current Valuations for HPCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 72.5, an improvement from the EPS of Rs 20.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 234.6, stands at 3.2 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 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 2.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	1,643.5	1,349.3
TTM Earnings per share	Rs	20.3	72.5
Diluted earnings per share	Rs	21.8	74.2
Price to Cash Flow	x	4.2	2.2
TTM P/E ratio	x	8.7	3.2
Price / Book Value ratio	x	1.2	0.8
Market Cap	Rs m	372,194	306,739
Dividends per share (Unadj.)	Rs	9.8	22.8

Ratio Analysis for HPCL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.7x during FY21, from 0.7x during FY20. 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 improved and stood at 15.6x during FY21, from 2.6x during FY20. 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 improved and stood at 27.6% during FY21, from 10.0% during FY21. 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 improved and stood at 22.8% during FY21, from 5.5% during FY20. 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 improved and stood at 8.6% during FY21, from 3.6% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	0.7	0.7
Debtors’ Days	Days	1	1
Interest coverage	x	2.6	15.6
Debt to equity ratio	x	0.7	0.7
Return on assets	%	3.6	8.6
Return on equity	%	10.0	27.6
Return on capital employed	%	5.5	22.8

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 190.2 to Rs 234.6, registering a gain of Rs 44.4 or around 23.3%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 14,820.5 (down 0.1%). Over the last one year it has moved up from 10,020.9 to 14,820.5, a gain of 4,800 points (up 47.9%).

Overall, the S&P BSE SENSEX is up 74.1% 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