HPCL 2021-22 Annual Report Analysis

Tue, 9 Aug

HPCL has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

HPCL Income Statement Analysis

• Operating income during the year rose 66.1% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 36.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 3.1% in FY22 as against 8.2% in FY21.
• Depreciation charges increased by 9.5% and finance costs increased by 1.0% YoY, respectively.
• Other income grew by 12.3% YoY.
• Net profit for the year declined by 39.4% YoY.
• Net profit margins during the year declined from 5.4% in FY21 to 2.0% in FY22.

HPCL Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	1,959,189	3,254,691	66.1%
Other income	Rs m	26,437	29,697	12.3%
Total Revenues	Rs m	1,985,627	3,284,388	65.4%
Gross profit	Rs m	160,034	101,759	-36.4%
Depreciation	Rs m	36,255	39,691	9.5%
Interest	Rs m	9,633	9,727	1.0%
Profit before tax	Rs m	140,583	82,037	-41.6%
Tax	Rs m	35,341	18,211	-48.5%
Profit after tax	Rs m	105,242	63,826	-39.4%
Gross profit margin	%	8.2	3.1
Effective tax rate	%	25.1	22.2
Net profit margin	%	5.4	2.0

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HPCL Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 707 billion as compared to Rs 624 billion in FY21, thereby witnessing an increase of 13.4%.
• Long-term debt stood at Rs 312 billion as compared to Rs 278 billion during FY21, a growth of 12.5%.
• Current assets rose 12% and stood at Rs 496 billion, while fixed assets rose 12% and stood at Rs 1,006 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 1,502 billion as against Rs 1,342 billion during FY21, thereby witnessing a growth of 12%.

HPCL Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	380,809	386,770	1.6
Current Liabilities	Rs m	623,803	707,496	13.4
Long-term Debt	Rs m	277,644	312,270	12.5
Total Liabilities	Rs m	1,341,597	1,501,604	11.9
Current assets	Rs m	441,671	495,715	12.2
Fixed Assets	Rs m	899,926	1,005,889	11.8
Total Assets	Rs m	1,341,597	1,501,604	11.9

HPCL Cash Flow Statement Analysis

• HPCL's cash flow from operating activities (CFO) during FY22 stood at Rs 159 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -126 billion, an improvement of 2.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -31 billion, an improvement of 34% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 2 billion from the Rs 8 billion net cash flows seen during FY21.

HPCL Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	178,293	158,898	-10.9%
Cash Flow from Investing Activities	Rs m	-122,786	-125,653	-
Cash Flow from Financing Activities	Rs m	-47,092	-31,194	-
Net Cash Flow	Rs m	8,415	2,050	-75.6%

Current Valuations for HPCL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 45.0, an decline from the EPS of Rs 72.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 239.1, stands at -5.6 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 4.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	1,349.3	2,294.4
TTM Earnings per share	Rs	72.5	45.0
Diluted earnings per share	Rs	74.2	45.0
Price to Cash Flow	x	2.4	4.0
TTM P/E ratio	x	3.2	-5.6
Price / Book Value ratio	x	0.8	1.1
Market Cap	Rs m	306,739	409,641
Dividends per share (Unadj.)	Rs	22.8	14.0

Ratio Analysis for HPCL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.7x during FY22, from 0.7x during FY21. 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 9.4x during FY22, from 15.6x during FY21. 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 16.5% during FY22, from 27.6% during FY22. 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 13.1% during FY22, from 22.8% during FY21. 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 4.9% during FY22, from 8.6% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	0.7	0.7
Debtors’ Days	Days	1	1
Interest coverage	x	15.6	9.4
Debt to equity ratio	x	0.7	0.8
Return on assets	%	8.6	4.9
Return on equity	%	27.6	16.5
Return on capital employed	%	22.8	13.1

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 262.0 to Rs 239.1, registering a loss of Rs 22.9 or around 8.7%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 19,330.3 (down 0.0%). Over the last one year it has moved up from 15,564.7 to 19,330.3, a gain of 3,766 points (up 24.2%).

Overall, the S&P BSE SENSEX is up 8.0% 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