HERO MOTOCORP 2021-22 Annual Report Analysis

Wed, 20 Jul

HERO MOTOCORP 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.

HERO MOTOCORP Income Statement Analysis

• Operating income during the year fell 4.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 16.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 11.7% in FY22 as against 13.2% in FY21.
• Depreciation charges decreased by 3.6% and finance costs increased by 14.4% YoY, respectively.
• Other income declined by 0.5% YoY.
• Net profit for the year declined by 15.2% YoY.
• Net profit margins during the year declined from 9.6% in FY21 to 8.6% in FY22.

HERO MOTOCORP Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	309,592	295,513	-4.5%
Other income	Rs m	5,579	5,550	-0.5%
Total Revenues	Rs m	315,171	301,063	-4.5%
Gross profit	Rs m	40,995	34,448	-16.0%
Depreciation	Rs m	7,151	6,895	-3.6%
Interest	Rs m	464	531	14.4%
Profit before tax	Rs m	38,959	32,572	-16.4%
Tax	Rs m	9,133	7,291	-20.2%
Profit after tax	Rs m	29,826	25,281	-15.2%
Gross profit margin	%	13.2	11.7
Effective tax rate	%	23.4	22.4
Net profit margin	%	9.6	8.6

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HERO MOTOCORP Balance Sheet Analysis

• The company's current liabilities during FY22 down at Rs 55 billion as compared to Rs 65 billion in FY21, thereby witnessing an decrease of -15.2%.
• Long-term debt down at Rs 362 million as compared to Rs 452 million during FY21, a fall of 19.9%.
• Current assets fell 7% and stood at Rs 106 billion, while fixed assets rose 1% and stood at Rs 127 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 233 billion as against Rs 240 billion during FY21, thereby witnessing a fall of 3%.

HERO MOTOCORP Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	153,974	158,222	2.8
Current Liabilities	Rs m	65,045	55,176	-15.2
Long-term Debt	Rs m	452	362	-19.9
Total Liabilities	Rs m	240,204	233,150	-2.9
Current assets	Rs m	113,705	105,722	-7.0
Fixed Assets	Rs m	126,499	127,428	0.7
Total Assets	Rs m	240,204	233,150	-2.9

HERO MOTOCORP Cash Flow Statement Analysis

• HERO MOTOCORP's cash flow from operating activities (CFO) during FY22 stood at Rs 21 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -20 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs -936 million from the Rs -307 million net cash flows seen during FY21.

HERO MOTOCORP 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	41,105	21,037	-48.8%
Cash Flow from Investing Activities	Rs m	-22,893	-2,220	-
Cash Flow from Financing Activities	Rs m	-18,518	-19,753	-
Net Cash Flow	Rs m	-307	-936	-

Current Valuations for HERO MOTOCORP

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 126.5, an decline from the EPS of Rs 149.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,826.0, stands at 22.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.6 times, while the price to sales ratio stands at 1.9 times.
• The company's price to cash flow (P/CF) ratio stood at 16.3 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	1,549.7	1,479.0
TTM Earnings per share	Rs	149.3	126.5
Diluted earnings per share	Rs	149.3	126.5
Price to Cash Flow	x	15.8	16.3
TTM P/E ratio	x	19.5	22.3
Price / Book Value ratio	x	3.4	3.3
Market Cap	Rs m	516,776	523,207
Dividends per share (Unadj.)	Rs	105.0	95.0

Ratio Analysis for HERO MOTOCORP

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.9x during FY22, from 1.7x 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 62.3x during FY22, from 84.9x 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 16.0% during FY22, from 19.4% 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 20.9% during FY22, from 25.5% 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 11.1% during FY22, from 12.6% 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	1.7	1.9
Debtors’ Days	Days	3	3
Interest coverage	x	84.9	62.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	12.6	11.1
Return on equity	%	19.4	16.0
Return on capital employed	%	25.5	20.9

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 2,840.3 to Rs 2,826.0, registering a loss of Rs 14.4 or around 0.5%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 28,762.1 (up 0.0%). Over the last one year it has moved up from 22,849.9 to 28,762.1, a gain of 5,912 points (up 25.9%).

Overall, the S&P BSE SENSEX is up 5.7% 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