HOV SERVICES 2021-22 Annual Report Analysis

Fri, 1 Jul

HOV SERVICES has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

HOV SERVICES Income Statement Analysis

• Operating income during the year rose 4.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 21.8% in FY22 as against 22.3% in FY21.
• Depreciation charges decreased by 0.2% and finance costs decreased by 43.7% YoY, respectively.
• Other income declined by 17.3% YoY.
• Net profit for the year declined by 10.5% YoY.
• Net profit margins during the year declined from 24.8% in FY21 to 21.3% in FY22.

HOV SERVICES Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	97	101	4.2%
Other income	Rs m	20	17	-17.3%
Total Revenues	Rs m	117	117	0.5%
Gross profit	Rs m	22	22	1.7%
Depreciation	Rs m	6	6	-0.2%
Interest	Rs m	4	2	-43.7%
Profit before tax	Rs m	31	30	-4.3%
Tax	Rs m	8	9	15.7%
Profit after tax	Rs m	24	21	-10.5%
Gross profit margin	%	22.3	21.8
Effective tax rate	%	23.8	28.8
Net profit margin	%	24.8	21.3

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HOV SERVICES Balance Sheet Analysis

• The company's current liabilities during FY22 down at Rs 140 million as compared to Rs 145 million in FY21, thereby witnessing an decrease of -3.7%.
• Current assets fell 17% and stood at Rs 111 million, while fixed assets fell 67% and stood at Rs 338 million in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 449 million as against Rs 1 billion during FY21, thereby witnessing a fall of 61%.

HOV SERVICES Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	959	300	-68.8
Current Liabilities	Rs m	145	140	-3.7
Long-term Debt	Rs m	7	0	-100.0
Total Liabilities	Rs m	1,162	449	-61.4
Current assets	Rs m	133	111	-16.8
Fixed Assets	Rs m	1,030	338	-67.1
Total Assets	Rs m	1,162	449	-61.4

HOV SERVICES Cash Flow Statement Analysis

• HOV SERVICES's cash flow from operating activities (CFO) during FY22 stood at Rs -1 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs 12 million, an improvement of 23.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -21 million, an improvement of 2% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs -10 million from the Rs 4 million net cash flows seen during FY21.

HOV SERVICES Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	17	-1	-
Cash Flow from Investing Activities	Rs m	9	12	23.4%
Cash Flow from Financing Activities	Rs m	-21	-21	-
Net Cash Flow	Rs m	4	-10	-

Current Valuations for HOV SERVICES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 1.7, an decline from the EPS of Rs 1.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 48.5, stands at 28.5 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 6.1 times.
• The company's price to cash flow (P/CF) ratio stood at 29.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	7.7	8.0
TTM Earnings per share	Rs	1.9	1.7
Diluted earnings per share	Rs	1.9	1.7
Price to Cash Flow	x	24.9	29.6
TTM P/E ratio	x	31.4	28.5
Price / Book Value ratio	x	0.6	2.7
Market Cap	Rs m	557	818
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for HOV SERVICES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY22, from 0.9x during FY21. 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 14.2x during FY22, from 8.8x during FY21. 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 7.2% during FY22, from 2.5% during FY22. 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 10.8% during FY22, from 3.7% during FY21. 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 5.3% during FY22, from 2.4% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	0.9	0.8
Debtors’ Days	Days	187,120	188,285
Interest coverage	x	8.8	14.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	2.4	5.3
Return on equity	%	2.5	7.2
Return on capital employed	%	3.7	10.8

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

HOV SERVICES Share Price Performance

Over the last one year, HOV SERVICES share price has moved down from Rs 55.3 to Rs 48.5, registering a loss of Rs 6.8 or around 12.3%.

Overall, the S&P BSE SENSEX is up 0.9% over the year.

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