HEG 2023-24 Annual Report Analysis

Tue, 2 Jul

HEG has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during FY23-24.

HEG Income Statement Analysis

• Operating income during the year fell 2.9% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 33.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 19.4% in FY24 as against 28.2% in FY23.
• Depreciation charges increased by 70.7% and finance costs increased by 37.4% YoY, respectively.
• Other income grew by 29.8% YoY.
• Net profit for the year declined by 41.5% YoY.
• Net profit margins during the year declined from 21.6% in FY23 to 13.0% in FY24.

HEG Income Statement 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Net Sales	Rs m	24,672	23,949	-2.9%
Other income	Rs m	1,091	1,417	29.8%
Total Revenues	Rs m	25,764	25,366	-1.5%
Gross profit	Rs m	6,965	4,641	-33.4%
Depreciation	Rs m	1,023	1,747	70.7%
Interest	Rs m	260	357	37.4%
Profit before tax	Rs m	6,774	3,954	-41.6%
Tax	Rs m	1,450	837	-42.3%
Profit after tax	Rs m	5,324	3,117	-41.5%
Gross profit margin	%	28.2	19.4
Effective tax rate	%	21.4	21.2
Net profit margin	%	21.6	13.0

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HEG Balance Sheet Analysis

• The company's current liabilities during FY24 down at Rs 12 billion as compared to Rs 13 billion in FY23, thereby witnessing an decrease of -11.3%.
• Current assets fell 8% and stood at Rs 26 billion, while fixed assets rose 8% and stood at Rs 31 billion in FY24.
• Overall, the total assets and liabilities for FY24 stood at Rs 57 billion as against Rs 57 billion during FY23, thereby witnessing a growth of 0%.

HEG Balance Sheet as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	42,809	44,259	3.4
Current Liabilities	Rs m	13,161	11,676	-11.3
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	56,920	57,014	0.2
Current assets	Rs m	28,525	26,298	-7.8
Fixed Assets	Rs m	28,395	30,715	8.2
Total Assets	Rs m	56,920	57,014	0.2

HEG Cash Flow Statement Analysis

• HEG's cash flow from operating activities (CFO) during FY24 stood at Rs 6 billion, an improvement of 440.3% on a YoY basis.
• Cash flow from investing activities (CFI) during FY24 stood at Rs -2 billion, an improvement of 773.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY24 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY24 stood at Rs 1 billion from the Rs -77 million net cash flows seen during FY23.

HEG Cash Flow Statement 2023-24

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-23	Mar-24
Cash Flow from Operating Activities	Rs m	1,133	6,122	440.3%
Cash Flow from Investing Activities	Rs m	-211	-1,843	-
Cash Flow from Financing Activities	Rs m	-1,000	-3,241	-
Net Cash Flow	Rs m	-77	1,038	-

Current Valuations for HEG

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 80.7, an decline from the EPS of Rs 137.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,239.6, stands at 37.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.0 times, while the price to sales ratio stands at 3.6 times.
• The company's price to cash flow (P/CF) ratio stood at 11.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Sales per share (Unadj.)	Rs	639.2	620.4
TTM Earnings per share	Rs	137.9	80.7
Diluted earnings per share	Rs	137.9	80.8
Price to Cash Flow	x	5.6	11.8
TTM P/E ratio	x	7.8	37.6
Price / Book Value ratio	x	1.1	1.3
Market Cap	Rs m	45,645	57,215
Dividends per share (Unadj.)	Rs	42.5	22.5

Ratio Analysis for HEG

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.3x during FY24, from 2.2x during FY23. 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 12.1x during FY24, from 27.0x during FY23. 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 7.0% during FY24, from 12.4% during FY24. 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 9.7% during FY24, from 16.4% during FY23. 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 6.1% during FY24, from 9.8% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Current ratio	x	2.2	2.3
Debtors’ Days	Days	724	775
Interest coverage	x	27.0	12.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.8	6.1
Return on equity	%	12.4	7.0
Return on capital employed	%	16.4	9.7

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

HEG Share Price Performance

Over the last one year, HEG share price has moved up from Rs 1,629.9 to Rs 2,239.6, registering a gain of Rs 609.7 or around 37.4%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 73,146.5 (up 0.6%). Over the last one year it has moved up from 40,725.8 to 73,146.5, a gain of 32,421 points (up 79.6%).

Overall, the S&P BSE SENSEX is up 24.4% over the year.

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