HINDUSTAN ZINC 2020-21 Annual Report Analysis

Wed, 31 Mar

HINDUSTAN ZINC 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.

HINDUSTAN ZINC Income Statement Analysis

• Operating income during the year rose 21.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 31.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 51.6% in FY21 as against 47.7% in FY20.
• Depreciation charges increased by 11.1% and finance costs increased by 244.6% YoY, respectively.
• Other income declined by 5.9% YoY.
• Net profit for the year grew by 17.3% YoY.
• Net profit margins during the year declined from 36.7% in FY20 to 35.3% in FY21.

HINDUSTAN ZINC Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	185,610	226,290	21.9%
Other income	Rs m	19,340	18,190	-5.9%
Total Revenues	Rs m	204,950	244,480	19.3%
Gross profit	Rs m	88,470	116,720	31.9%
Depreciation	Rs m	22,790	25,310	11.1%
Interest	Rs m	1,120	3,860	244.6%
Profit before tax	Rs m	83,900	105,740	26.0%
Tax	Rs m	15,850	25,940	63.7%
Profit after tax	Rs m	68,050	79,800	17.3%
Gross profit margin	%	47.7	51.6
Effective tax rate	%	18.9	24.5
Net profit margin	%	36.7	35.3

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HINDUSTAN ZINC Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 79 billion as compared to Rs 54 billion in FY20, thereby witnessing an increase of 45.5%.
• Long-term debt stood at Rs 43 billion as compared to Rs 0 million during FY20, a fall of 0.0%.
• Current assets fell 1% and stood at Rs 246 billion, while fixed assets fell 1% and stood at Rs 201 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 447 billion as against Rs 452 billion during FY20, thereby witnessing a fall of 1%.

HINDUSTAN ZINC Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	403,100	323,130	-19.8
Current Liabilities	Rs m	54,130	78,760	45.5
Long-term Debt	Rs m	0	43,120	0.0
Total Liabilities	Rs m	451,530	446,690	-1.1
Current assets	Rs m	248,130	245,680	-1.0
Fixed Assets	Rs m	203,400	201,010	-1.2
Total Assets	Rs m	451,530	446,690	-1.1

HINDUSTAN ZINC Cash Flow Statement Analysis

• HINDUSTAN ZINC's cash flow from operating activities (CFO) during FY21 stood at Rs 106 billion, an improvement of 59.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -24 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -97 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -16 billion from the Rs 19 billion net cash flows seen during FY20.

HINDUSTAN ZINC 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	66,210	105,670	59.6%
Cash Flow from Investing Activities	Rs m	-26,480	-24,350	-
Cash Flow from Financing Activities	Rs m	-20,980	-96,970	-
Net Cash Flow	Rs m	18,750	-15,650	-

Current Valuations for HINDUSTAN ZINC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 18.9, an improvement from the EPS of Rs 16.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 272.8, stands at 14.4 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 5.1 times.
• The company's price to cash flow (P/CF) ratio stood at 9.8 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	43.9	53.6
TTM Earnings per share	Rs	16.1	18.9
Diluted earnings per share	Rs	16.1	18.9
Price to Cash Flow	x	7.2	9.8
TTM P/E ratio	x	9.6	14.4
Price / Book Value ratio	x	2.2	3.2
Market Cap	Rs m	874,219	1,026,647
Dividends per share (Unadj.)	Rs	16.5	21.3

Ratio Analysis for HINDUSTAN ZINC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 3.1x during FY21, from 4.6x 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 28.4x during FY21, from 75.9x 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 24.7% during FY21, from 16.9% 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 29.9% during FY21, from 21.1% 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 18.7% during FY21, from 15.3% 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	4.6	3.1
Debtors’ Days	Days	1	1
Interest coverage	x	75.9	28.4
Debt to equity ratio	x	0.0	0.1
Return on assets	%	15.3	18.7
Return on equity	%	16.9	24.7
Return on capital employed	%	21.1	29.9

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

HINDUSTAN ZINC Share Price Performance

Over the last one year, HINDUSTAN ZINC share price has moved up from Rs 155.2 to Rs 272.8, registering a gain of Rs 117.7 or around 75.8%.

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

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

Read: Latest Annual Report Analysis of HINDUSTAN ZINC