HERO MOTOCORP 2022-23 Annual Report Analysis

Wed, 19 Jul

HERO MOTOCORP has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

HERO MOTOCORP Income Statement Analysis

• Operating income during the year rose 15.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 26.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 11.6% in FY23 as against 10.6% in FY22.
• Depreciation charges decreased by 2.4% and finance costs increased by 97.5% YoY, respectively.
• Other income grew by 2.5% YoY.
• Net profit for the year grew by 20.2% YoY.
• Net profit margins during the year grew from 7.9% in FY22 to 8.2% in FY23.

HERO MOTOCORP Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	295,513	341,584	15.6%
Other income	Rs m	5,550	5,690	2.5%
Total Revenues	Rs m	301,063	347,274	15.3%
Gross profit	Rs m	31,436	39,725	26.4%
Depreciation	Rs m	5,874	5,731	-2.4%
Interest	Rs m	531	1,049	97.5%
Profit before tax	Rs m	30,581	38,636	26.3%
Tax	Rs m	7,291	10,637	45.9%
Profit after tax	Rs m	23,291	27,999	20.2%
Gross profit margin	%	10.6	11.6
Effective tax rate	%	23.8	27.5
Net profit margin	%	7.9	8.2

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HERO MOTOCORP Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 60 billion as compared to Rs 55 billion in FY22, thereby witnessing an increase of 9.0%.
• Long-term debt down at Rs 201 million as compared to Rs 362 million during FY22, a fall of 44.5%.
• Current assets fell 11% and stood at Rs 94 billion, while fixed assets rose 21% and stood at Rs 155 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 249 billion as against Rs 233 billion during FY22, thereby witnessing a growth of 7%.

HERO MOTOCORP Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	158,222	166,199	5.0
Current Liabilities	Rs m	55,176	60,126	9.0
Long-term Debt	Rs m	362	201	-44.5
Total Liabilities	Rs m	233,150	248,957	6.8
Current assets	Rs m	105,722	94,353	-10.8
Fixed Assets	Rs m	127,428	154,604	21.3
Total Assets	Rs m	233,150	248,957	6.8

HERO MOTOCORP Cash Flow Statement Analysis

• HERO MOTOCORP's cash flow from operating activities (CFO) during FY23 stood at Rs 26 billion, an improvement of 24.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -4 billion, an improvement of 89.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -21 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 453 million from the Rs -936 million net cash flows seen during FY22.

HERO MOTOCORP Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	21,037	26,138	24.2%
Cash Flow from Investing Activities	Rs m	-2,220	-4,213	-
Cash Flow from Financing Activities	Rs m	-19,753	-21,472	-
Net Cash Flow	Rs m	-936	453	-

Current Valuations for HERO MOTOCORP

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 140.1, an improvement from the EPS of Rs 116.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 3,101.4, stands at 22.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.7 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 15.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	1,479.0	1,709.3
TTM Earnings per share	Rs	116.6	140.1
Diluted earnings per share	Rs	116.5	140.1
Price to Cash Flow	x	15.7	15.1
TTM P/E ratio	x	18.2	22.2
Price / Book Value ratio	x	3.3	3.1
Market Cap	Rs m	523,207	508,687
Dividends per share (Unadj.)	Rs	95.0	100.0

Ratio Analysis for HERO MOTOCORP

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.6x during FY23, from 1.9x during FY22. 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 37.8x during FY23, from 58.6x during FY22. 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 improved and stood at 16.8% during FY23, from 14.7% during FY23. 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 improved and stood at 23.8% during FY23, from 19.6% during FY22. 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 improved and stood at 11.7% during FY23, from 10.2% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.9	1.6
Debtors’ Days	Days	3	3
Interest coverage	x	58.6	37.8
Debt to equity ratio	x	0.0	0.0
Return on assets	%	10.2	11.7
Return on equity	%	14.7	16.8
Return on capital employed	%	19.6	23.8

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 2,799.3 to Rs 3,101.4, registering a gain of Rs 302.1 or around 10.8%.

Meanwhile, the S&P BSE AUTO Index is trading at Rs 35,648.4 (down 0.0%). Over the last one year it has moved up from 28,756.3 to 35,648.4, a gain of 6,892 points (up 24.0%).

Overall, the S&P BSE SENSEX is up 22.6% over the year.

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