HSIL 2018-19 Annual Report Analysis

Sun, 31 Mar

HSIL has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

HSIL Income Statement Analysis

• Operating income during the year rose 22.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 19.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 11.6% in FY19 as against 12.0% in FY18.
• Depreciation charges increased by 32.4% and finance costs increased by 56.9% YoY, respectively.
• Other income grew by 208.7% YoY.
• Net profit for the year declined by 5.5% YoY.
• Net profit margins during the year declined from 3.3% in FY18 to 2.6% in FY19.

HSIL Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	22,178	27,124	22.3%
Other income	Rs m	97	299	208.7%
Total Revenues	Rs m	22,275	27,423	23.1%
Gross profit	Rs m	2,653	3,158	19.0%
Depreciation	Rs m	1,141	1,510	32.4%
Interest	Rs m	558	875	56.9%
Profit before tax	Rs m	1,051	1,072	2.0%
Tax	Rs m	310	372	19.8%
Profit after tax	Rs m	741	700	-5.5%
Gross profit margin	%	12.0	11.6
Effective tax rate	%	29.5	34.7
Net profit margin	%	3.3	2.6

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HSIL Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 10 billion as compared to Rs 12 billion in FY18, thereby witnessing an decrease of -14.3%.
• Long-term debt stood at Rs 8 billion as compared to Rs 5 billion during FY18, a growth of 44.0%.
• Current assets fell 5% and stood at Rs 14 billion, while fixed assets rose 8% and stood at Rs 22 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 36 billion as against Rs 35 billion during FY18, thereby witnessing a growth of 2%.

HSIL Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	14,875	15,128	1.7
Current Liabilities	Rs m	11,869	10,171	-14.3
Long-term Debt	Rs m	5,230	7,532	44.0
Total Liabilities	Rs m	34,737	35,604	2.5
Current assets	Rs m	14,291	13,537	-5.3
Fixed Assets	Rs m	20,445	22,068	7.9
Total Assets	Rs m	34,737	35,604	2.5

HSIL Cash Flow Statement Analysis

• HSIL's cash flow from operating activities (CFO) during FY19 stood at Rs 3 billion, an improvement of 500.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -3 billion, an improvement of 76.0% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -2 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -2 billion from the Rs 957 million net cash flows seen during FY18.

HSIL Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	548	3,290	500.4%
Cash Flow from Investing Activities	Rs m	-1,831	-3,222	-
Cash Flow from Financing Activities	Rs m	2,240	-1,852	-
Net Cash Flow	Rs m	957	-1,784	-

Current Valuations for HSIL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 9.7, an decline from the EPS of Rs 10.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 250.0, stands at 23.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.1 times, while the price to sales ratio stands at 0.7 times.
• The company's price to cash flow (P/CF) ratio stood at 9.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	306.7	375.2
TTM Earnings per share	Rs	10.2	9.7
Diluted earnings per share	Rs	11.5	10.8
Price to Cash Flow	x	12.8	9.9
TTM P/E ratio	x	32.1	23.0
Price / Book Value ratio	x	2.2	1.4
Market Cap	Rs m	32,185	21,870
Dividends per share (Unadj.)	Rs	4.0	3.0

Ratio Analysis for HSIL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.3x during FY19, from 1.2x during FY18. 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 2.2x during FY19, from 2.9x during FY18. 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 4.6% during FY19, from 5.0% during FY19. 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 8.6% during FY19, from 8.0% during FY18. 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 4.4% during FY19, from 3.7% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	1.2	1.3
Debtors’ Days	Days	846	791
Interest coverage	x	2.9	2.2
Debt to equity ratio	x	0.4	0.5
Return on assets	%	3.7	4.4
Return on equity	%	5.0	4.6
Return on capital employed	%	8.0	8.6

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 down from Rs 371.2 to Rs 250.0, registering a loss of Rs 121.3 or around 32.7%.

Overall, the S&P BSE SENSEX is up 16.3% over the year.

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

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