HERO MOTOCORP 2018-19 Annual Report Analysis

Sun, 31 Mar

HERO MOTOCORP 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.

HERO MOTOCORP Income Statement Analysis

• Operating income during the year rose 6.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 5.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.8% in FY19 as against 16.7% in FY18.
• Depreciation charges increased by 8.6% and finance costs increased by 20.7% YoY, respectively.
• Other income grew by 31.3% YoY.
• Net profit for the year declined by 7.3% YoY.
• Net profit margins during the year declined from 11.5% in FY18 to 10.0% in FY19.

HERO MOTOCORP Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	318,158	339,694	6.8%
Other income	Rs m	5,232	6,867	31.3%
Total Revenues	Rs m	323,390	346,561	7.2%
Gross profit	Rs m	53,251	50,184	-5.8%
Depreciation	Rs m	5,750	6,244	8.6%
Interest	Rs m	308	372	20.7%
Profit before tax	Rs m	52,424	50,435	-3.8%
Tax	Rs m	15,699	16,380	4.3%
Profit after tax	Rs m	36,725	34,056	-7.3%
Gross profit margin	%	16.7	14.8
Effective tax rate	%	29.9	32.5
Net profit margin	%	11.5	10.0

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HERO MOTOCORP Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 44 billion as compared to Rs 45 billion in FY18, thereby witnessing an decrease of -1.6%.
• Long-term debt down at Rs 1 billion as compared to Rs 1 billion during FY18, a fall of 16.6%.
• Current assets fell 7% and stood at Rs 84 billion, while fixed assets rose 19% and stood at Rs 117 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 201 billion as against Rs 188 billion during FY18, thereby witnessing a growth of 7%.

HERO MOTOCORP Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	119,647	131,108	9.6
Current Liabilities	Rs m	44,814	44,092	-1.6
Long-term Debt	Rs m	1,496	1,248	-16.6
Total Liabilities	Rs m	188,477	201,036	6.7
Current assets	Rs m	90,022	84,132	-6.5
Fixed Assets	Rs m	98,455	116,904	18.7
Total Assets	Rs m	188,477	201,036	6.7

HERO MOTOCORP Cash Flow Statement Analysis

• HERO MOTOCORP's cash flow from operating activities (CFO) during FY19 stood at Rs 10 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 13 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -23 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 775 million from the Rs 566 million net cash flows seen during FY18.

HERO MOTOCORP 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	40,172	10,323	-74.3%
Cash Flow from Investing Activities	Rs m	-18,582	12,976	-
Cash Flow from Financing Activities	Rs m	-21,025	-22,524	-
Net Cash Flow	Rs m	566	775	37.1%

Current Valuations for HERO MOTOCORP

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 170.5, an decline from the EPS of Rs 183.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,555.3, stands at 201.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.9 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 15.8 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	1,593.1	1,700.8
TTM Earnings per share	Rs	183.9	170.5
Diluted earnings per share	Rs	183.8	170.4
Price to Cash Flow	x	16.7	15.8
TTM P/E ratio	x	280.0	201.8
Price / Book Value ratio	x	6.2	4.9
Market Cap	Rs m	736,935	637,049
Dividends per share (Unadj.)	Rs	95.0	87.0

Ratio Analysis for HERO MOTOCORP

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.9x during FY19, from 2.0x 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 136.7x during FY19, from 171.2x 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 26.0% during FY19, from 30.7% 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 38.4% during FY19, from 43.5% 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 17.1% during FY19, from 19.6% 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	2.0	1.9
Debtors’ Days	Days	2	3
Interest coverage	x	171.2	136.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	19.6	17.1
Return on equity	%	30.7	26.0
Return on capital employed	%	43.5	38.4

To see how HERO MOTOCORP has performed over the last 5 years, please visit here.

HERO MOTOCORP Share Price Performance

Over the last one year, HERO MOTOCORP share price has moved down from Rs 3,545.5 to Rs 2,555.3, registering a loss of Rs 990.3 or around 27.9%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 18,824.9 (up 1.2%). Over the last one year it has moved down from 24,057.3 to 18,824.9, a loss of 5,232 points (down 21.7%).

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

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

Read: Latest Annual Report Analysis of HERO MOTOCORP