HERO MOTOCORP 2018-19 Annual Report Analysis

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HERO MOTOCORP 2018-19 Annual Report Analysis
Mon, 8 Jul

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 4.7% 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 16.4% 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 6.9% YoY.
  • Net profit margins during the year declined from 11.3% 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 324,584 339,708 4.7%
Other income Rs m 5,232 6,867 31.3%
Total Revenues Rs m 329,815 346,576 5.1%
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 37,222 34,664 -6.9%
Gross profit margin % 16.4 14.8
Effective tax rate % 29.9 32.5
Net profit margin % 11.3 10.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 4% and stood at Rs 55 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 185 billion as against Rs 174 billion during FY18, thereby witnessing a growth of 6%.

HERO MOTOCORP Balance Sheet as on March 2019

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Networth Rs m 119,715 131,204 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 173,967 185,044 6.4
 
Current assets Rs m 90,022 84,132 -6.5
Fixed Assets Rs m 53,164 55,252 3.9
Total Assets Rs m 173,967 185,044 6.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 37.0%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for HERO MOTOCORP

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 173.6, an decline from the EPS of Rs 186.4 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 2,413.0, stands at 14.2 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 4.9 times, while the price to sales ratio stands at 1.9 times.
  • The company's price to cash flow (P/CF) ratio stood at 12.0 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 1,625.4 1,700.8
TTM Earnings per share Rs 186.4 173.6
Diluted earnings per share Rs 186.4 173.6
Price to Cash Flow x 11.3 12.0
TTM P/E ratio x 14.2 14.2
Price / Book Value ratio x 6.2 4.9
Market Cap Rs m 481,842 481,844
Dividends per share (Unadj.) Rs 95.0 87.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 26.4% during FY19, from 31.1% 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 38.8% during FY19, from 43.9% 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 18.9% during FY19, from 21.6% 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 16 29
Interest coverage x 171.2 136.7
Debt to equity ratio x 0.0 0.0
Return on assets % 21.6 18.9
Return on equity % 31.1 26.4
Return on capital employed % 43.9 38.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 up from Rs 3,636.7 to Rs 2,413.0, registering a loss of Rs 1,223.8 or around 33.7%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 17,292.8 (down 2.3%). Over the last one year it has moved down from 24,702.0 to 17,292.8, a loss of 7,409 points (down 30.0%).

Overall, the S&P BSE SENSEX is up 9.9% over the year.

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

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