HERO MOTOCORP 2020-21 Annual Report Analysis

Wed, 31 Mar

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 12.4% in FY20 to 9.6% 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	%	12.4	9.6

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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

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	-

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 2,915.2, stands at 19.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.8 times, while the price to sales ratio stands at 1.9 times.
• The company's price to cash flow (P/CF) ratio stood at 14.0 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	7.1	14.0
TTM P/E ratio	x	8.8	19.5
Price / Book Value ratio	x	3.1	3.4
Market Cap	Rs m	449,034	516,776
Dividends per share (Unadj.)	Rs	90.0	105.0

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

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 1,594.2 to Rs 2,915.2, registering a gain of Rs 1,321.0 or around 82.9%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 22,252.2 (down 0.0%). Over the last one year it has moved up from 10,746.2 to 22,252.2, a gain of 11,506 points (up 107.1%).

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