HSIL 2020-21 Annual Report Analysis

Wed, 31 Mar

HSIL 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.

HSIL Income Statement Analysis

• Operating income during the year fell 0.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 15.1% in FY21 as against 14.0% in FY20.
• Depreciation charges decreased by 15.1% and finance costs decreased by 2.2% YoY, respectively.
• Other income declined by 11.3% YoY.
• Net profit for the year grew by 81.9% YoY.
• Net profit margins during the year grew from 2.6% in FY20 to 4.8% in FY21.

HSIL Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	18,591	18,526	-0.3%
Other income	Rs m	320	284	-11.3%
Total Revenues	Rs m	18,910	18,809	-0.5%
Gross profit	Rs m	2,594	2,797	7.8%
Depreciation	Rs m	1,429	1,214	-15.1%
Interest	Rs m	735	719	-2.2%
Profit before tax	Rs m	750	1,148	53.1%
Tax	Rs m	266	268	0.7%
Profit after tax	Rs m	484	881	81.9%
Gross profit margin	%	14.0	15.1
Effective tax rate	%	35.4	23.3
Net profit margin	%	2.6	4.8

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HSIL Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 7 billion as compared to Rs 6 billion in FY20, thereby witnessing an increase of 7.3%.
• Long-term debt down at Rs 7 billion as compared to Rs 7 billion during FY20, a fall of 7.3%.
• Current assets fell 1% and stood at Rs 9 billion, while fixed assets fell 0% and stood at Rs 20 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 29 billion as against Rs 29 billion during FY20, thereby witnessing a fall of 0%.

HSIL Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	12,569	12,336	-1.9
Current Liabilities	Rs m	6,179	6,628	7.3
Long-term Debt	Rs m	7,287	6,754	-7.3
Total Liabilities	Rs m	28,684	28,560	-0.4
Current assets	Rs m	8,942	8,858	-0.9
Fixed Assets	Rs m	19,742	19,702	-0.2
Total Assets	Rs m	28,684	28,560	-0.4

HSIL Cash Flow Statement Analysis

• HSIL's cash flow from operating activities (CFO) during FY21 stood at Rs 3 billion, an improvement of 226.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -1 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -212 million from the Rs -106 million net cash flows seen during FY20.

HSIL 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	1,068	3,488	226.7%
Cash Flow from Investing Activities	Rs m	-1,149	-1,076	-
Cash Flow from Financing Activities	Rs m	-24	-2,624	-
Net Cash Flow	Rs m	-106	-212	-

Current Valuations for HSIL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 13.6, an improvement from the EPS of Rs 6.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 153.5, stands at 11.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.8 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 3.7 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	257.1	286.3
TTM Earnings per share	Rs	6.7	13.6
Diluted earnings per share	Rs	7.5	13.6
Price to Cash Flow	x	1.3	3.7
TTM P/E ratio	x	5.2	11.1
Price / Book Value ratio	x	1.0	0.6
Market Cap	Rs m	12,312	7,765
Dividends per share (Unadj.)	Rs	3.0	4.0

Ratio Analysis for HSIL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY21, from 1.4x 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 improved and stood at 2.6x during FY21, from 2.0x 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 improved and stood at 7.1% during FY21, from 3.9% 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 improved and stood at 9.8% during FY21, from 7.5% 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 improved and stood at 5.6% during FY21, from 4.2% 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	1.4	1.3
Debtors’ Days	Days	575	625
Interest coverage	x	2.0	2.6
Debt to equity ratio	x	0.6	0.5
Return on assets	%	4.2	5.6
Return on equity	%	3.9	7.1
Return on capital employed	%	7.5	9.8

To see how HSIL has performed over the last 5 years, please visit here.

HSIL Share Price Performance

Over the last one year, HSIL share price has moved up from Rs 39.2 to Rs 153.5, registering a gain of Rs 114.3 or around 291.6%.

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

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

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