Basic analysis of HBL power system

Basic analysis of HBL power system: In today’s world, batteries are becoming increasingly important. The ability to store energy for use at any time unlocks greater potential when needed. The battery market is expected to grow in line with increased consumption. In this article, we take a look at HBL Power Systems Ltd., a manufacturer of lead-acid batteries used in a variety of industries.

Basic analysis of HBL power system

Company Overview

HBL Power Systems Ltd. started its operations in 1977 when Jagadish Prasad Aluru was established. Specializes in engineering products and services. The product chosen and used successfully was an aircraft battery.

Expertise in batteries provided opportunities and ideas for diversification. We expanded our business into new battery-based businesses and markets such as industrial electronics, defense electronics, and railway electronic signals.

Diversification leveraging the company’s engineering strengths has created new businesses in precision manufacturing, rotationally reinforced concrete, and green technologies.

segment analysis

The company recognizes revenue from batteries and electronics. As of FY23, batteries were unallocated at 86.43%, electronics at 10.73% and the remaining 2.84%. In fiscal year 23, domestic sales accounted for 84.84% of sales, and exports accounted for the remaining 15.15%.

The battery and electronic sectors increased by 8.20% and 33.04%, respectively, compared to the previous year. The company has six manufacturing facilities in the states of Andhra Pradesh and Telangana.

Industry Overview

As technology advances, batteries are also evolving. The battery market is led by lithium-ion batteries, and energy storage technology using salt is developing.

The Indian lead acid battery market is expected to grow at a CAGR of over 9% from 2023 to 2028.

During the forecast period, business volume is expected to increase due to increasing demand in telecommunication and data centers and increasing applications in industries such as railways and defense.

The replacement battery segment currently holds a market share of over 70%. Increasing technological advancements coupled with strengthening of the telecom sector are boosting the lead acid battery industry in India.

Fundamental Analysis of HBL Power Systems – Financials

Sales and Net Profit

The company’s revenue was Rs. 1,368.67 crore in FY23 compared to Rs. It increased by 10.71% to ₹1,236.21 crore in FY22. Net profit recorded 160 million won. 98.65 crore in FY23 compared to Rs. It increased by 5.27% to Rs 93.71 crore in FY22.

Sales have been flat at a compound annual growth rate (CAGR) of 2.06% over the past five years. Net profit has grown at an impressive CAGR of 37.13% and the company’s revenue has grown exponentially since FY21.

profit

The company’s OPM was consistent at 11% in FY22 and FY23. NPM was 7.09 in FY23 compared to 7.50% in FY22. The averages of OPM and NPM were 8.80% and 4.07%, respectively. The company’s margins increased significantly from FY22. Manufacturing costs have also been controlled, helping improve margins, according to the finance department.

rate of return

RoE and RoCE were 10.36% and 13.25% in FY23 compared to 10.84% ​​and 12.90% in FY22. The five-year average was 5.99% and 9.25%.

The company’s returns improved over FY21. RoCE is higher than RoE, indicating better debt utilization. HBL has been performing better and growing above its five-year average.

debt analysis

The company’s debt to equity ratio was 0.08 in FY23 compared to 0.06 in FY22. The interest coverage ratio was 25.83x in FY23 compared to 20.51x in FY22.

The average D/E and interest coverage ratio for 5 years were 0.13% and 10.72%, respectively. Debt is under control and coverage ratios are improving as profits grow.

key indicators

Key indicators for HBL Power Systems Ltd. are:

Fundamental Analysis of HBL Power Systems Ltd – Future Plans

• The government is investing in railways, and interest in installing KAVACH, a train collision avoidance device, to prevent accidents is growing, and increased expertise in this field can help increase profits.
• The company plans to invest 50 billion won. Excluding the investment in Tonbo Imaging Ltd worth Rs, capital expenditure for FY24 is $9 billion. 15 billion.
• The company has projected revenue of FY24 – ₹ 1,750 crore, FY25 – ₹ 2,300 crore and FY26 – ₹ 2,900 crore. Sales growth is expected to come from a variety of sectors, including industrial batteries, defense and aviation batteries, and industrial electronics.

conclusion

Towards the end of the article, we will briefly review the basic analysis of the HBL power system. HBL’s profitability improved due to increased margins. Additional revenue growth and margin control will benefit both the company’s market share and shareholders.

Having a low or zero debt ratio can help you scale your business more effectively. Government investment in rail, particularly in installing the KAVACH system, has the potential to significantly increase expertise and opportunities.

What do you think about the company’s prospects? Let us know your thoughts in the comments section below.

Written by Santosh

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