HERO MOTOCORP 2020-21 Annual Report Analysis

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HERO MOTOCORP 2020-21 Annual Report Analysis
Tue, 19 Oct

HERO MOTOCORP 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.

HERO MOTOCORP Income Statement Analysis

  • Operating income during the year rose 5.8% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 13.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.2% in FY21 as against 16.2% in FY20.
  • Depreciation charges decreased by 15.4% and finance costs decreased by 0.5% YoY, respectively.
  • Other income declined by 23.6% YoY.
  • Net profit for the year declined by 17.7% YoY.
  • Net profit margins during the year declined from 12.1% in FY20 to 9.5% in FY21.

HERO MOTOCORP Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 292,526 309,592 5.8%
Other income Rs m 7,306 5,579 -23.6%
Total Revenues Rs m 299,832 315,171 5.1%
Gross profit Rs m 47,383 40,995 -13.5%
Depreciation Rs m 8,458 7,151 -15.4%
Interest Rs m 466 464 -0.5%
Profit before tax Rs m 45,765 38,959 -14.9%
Tax Rs m 9,517 9,133 -4.0%
Profit after tax Rs m 36,248 29,826 -17.7%
Gross profit margin % 16.2 13.2
Effective tax rate % 20.8 23.4
Net profit margin % 12.1 9.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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HERO MOTOCORP Balance Sheet Analysis

  • The company's current liabilities during FY21 stood at Rs 65 billion as compared to Rs 43 billion in FY20, thereby witnessing an increase of 52.0%.
  • Long-term debt stood at Rs 452 million as compared to Rs 440 million during FY20, a growth of 2.6%.
  • Current assets rose 31% and stood at Rs 114 billion, while fixed assets rose 4% and stood at Rs 126 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 240 billion as against Rs 208 billion during FY20, thereby witnessing a growth of 16%.

HERO MOTOCORP Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 143,908 153,974 7.0
 
Current Liabilities Rs m 42,791 65,045 52.0
Long-term Debt Rs m 440 452 2.6
Total Liabilities Rs m 207,730 240,204 15.6
 
Current assets Rs m 86,492 113,705 31.5
Fixed Assets Rs m 121,238 126,499 4.3
Total Assets Rs m 207,730 240,204 15.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



HERO MOTOCORP Cash Flow Statement Analysis

  • HERO MOTOCORP's cash flow from operating activities (CFO) during FY21 stood at Rs 41 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -23 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -19 billion, an improvement of 29% on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs -307 million from the Rs 972 million net cash flows seen during FY20.

HERO MOTOCORP 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 55,181 41,105 -25.5%
Cash Flow from Investing Activities Rs m -28,191 -22,893 -
Cash Flow from Financing Activities Rs m -26,018 -18,518 -
Net Cash Flow Rs m 972 -307 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for HERO MOTOCORP

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 149.3, an decline from the EPS of Rs 181.5 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 2,910.0, stands at 17.5 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.4 times, while the price to sales ratio stands at 1.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 15.7 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 1,464.5 1,549.7
TTM Earnings per share Rs 181.5 149.3
Diluted earnings per share Rs 181.4 149.3
Price to Cash Flow x 13.0 15.7
TTM P/E ratio x 17.5 17.5
Price / Book Value ratio x 3.1 3.4
Market Cap Rs m 581,242 581,389
Dividends per share (Unadj.) Rs 90.0 105.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for HERO MOTOCORP

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 1.7x during FY21, from 2.0x 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 deteriorated and stood at 84.9x during FY21, from 99.1x 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 declined and down at 19.4% during FY21, from 25.2% 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 declined and down at 25.5% during FY21, from 32.0% 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 declined and down at 12.6% during FY21, from 17.7% 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 2.0 1.7
Debtors’ Days Days 2 3
Interest coverage x 99.1 84.9
Debt to equity ratio x 0.0 0.0
Return on assets % 17.7 12.6
Return on equity % 25.2 19.4
Return on capital employed % 32.0 25.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 down from Rs 3,247.8 to Rs 2,910.0, registering a loss of Rs 337.8 or around 10.4%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 26,299.0 (down 0.6%). Over the last one year it has moved up from 17,805.6 to 26,299.0, a gain of 8,493 points (up 47.7%).

Overall, the S&P BSE SENSEX is up 52.0% over the year.

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

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HERO MOTOCORP 2019-20 Annual Report Analysis (Annual Result Update)

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