Infamous Analysis of Himalayan Distillery Limited (HDL)
(Disclaimer: This analysis is for educational purposes only, not buy sell recommendation, through infamous analysis we only provide
some significant data based on which you can take your decision).
People say Alcohol is never good for you & your money, as it destroys your health as well as wealth but asked the people who had invested in HDL,
and they will say something else, they had made good wealth over the period with the help of Alcohol. Alcohol destroys your wealth but investing in
HDL had made wealth for many investors, so do not drink alcohol, and destroy money buy HDL Shares and make money.
In 2017-18 the Market price of HDL was 1351 and after 5 the market price is 3410 after adjusting the bonus of 245% so if we calculate the compounded return,
Approx 74% is the return that is beyond the sky. This mammoth Compounded return is well supported by ROE – Return on equity, ROCE-
Return on capital employed,
ROA- Return on Assets, and Current Ratio.
Stop, stop, stop yourself from going to TMS and placing a buy order based on just the above date let’s dive deeply into other Key Financial Indicators over the period.
So, we are going to see some Key Financial highlights of HDL over the 5 years
(The below financial Figures are taken from the annual report & Quarterly report)
Here is a Quick Snapshot
Sales & Margin: The Gross sales in the last 5 years have increased by 45 % from Rs-5.23 Arba ( billions) to 7.58 billion and have not seen a
downside except covid period however, in Q-2 of 2079-80, the sales of HDL has been decreased by 18% compared Quarter to quarter but the
good thing is the Gross profit margin which started at 44 % now sits at 61 % at the financial year ended on 2078-79, where net profit which was 12 %
in 2017-78(74-75) is at 26 % as of the year ended on 2078-79. Which was 26 % for the years 2077-78.
(Note: Net Sales are derived after deducting excise duty from revenue)
Other-Income: Other income of HDL stands below 1% of revenue which is nominal and not to is worried but in Q-2 of 2079-80 Other income has
grown by 473 %in comparison to the same period of the previous year whereas, in the same period, revenue has decreased by 18 %
Revenue & Other Income in the chart is presented below.
Revenue & Other Income figures along with Changes / Variance over the year.
Below is the chart that compares Net sales, Gross-profit, Net Profit, and Gross & Net Profit margins.
Conclusion: The sales seem on an upward trend except for Q-2 of 79-80. The reason could be the economic condition of the country inflation
and various other factor but we have towait for Q-3 to drive a conclusive opinion on future sales & growth.
The next part of the Analysis is the Key Expenditure Analysis which will give a vivid idea of how the operation of the company is conducted
and how the company is managing it the good the control is the better is for the company.
Key expenditure analysis
Cost of Goods Sold (COGS) & Manufacturing Exp :
We will analyze the COGS & Manufacturing Expenses with the portion of Net sales. The total production cost which was 56 % of Net sales
value in 2074-75 came down to 39 % in 2078-79 i.e., in the period of 5 years.
This is positive as the company is controlling its production cost which helps to improve its gross profit and is beneficialfor the company.
Below is the chart that compares COGS-Manufacturing cost -Total Cost with Net Sales
Selling & Distribution Expense:
We will analyze the Selling & Distribution Expenses with the portion of Revenue. The Selling & Distribution expenses which were 34.16 crores,
7% of revenue in 2074-75were reduced in 2076-77 whereas, in 78-79, the expenses were 64.67 crore which is 8% of revenue.
The selling & distribution expenses are almost the same compared to the portion of revenue. We might see the raise in S&D expenses to
increase the revenue which is decreased in Q-2 of 79-80
Below is the chart that compares selling & Distribution Expenses with revenue.
Finance Cost/Exp:
The financial Expenses are decreasing over the period and are significant compared to Net sales. We have analyzed financial cost with
net sales because Net sales arecalculated by deducting Excise duty from revenue. The Comparison with Net sales is appropriate rather than Revenue.
Below is the chart that compares Finance Costs with Net Sales
Conclusion: The Himalayan Distillery Limited (HDL) has good control over its expenses and has proper planning on how to manage & control the expenses,
which is positive for the company as the company seems to know what they are going and they are good at it.
Cash Flow Analysis:
The cash flow is the only statement that cannot be manipulated and controlled it always shows a real picture of what is happening in the
company and what the company is trying to improve.
–Cash Flow from Operating Activities: Here all cash flows related to the operating activities of companies are shown, such as the amount
received from debtors, payment made to creditors, operating expenses paid/ payable, and income cash received or receivable. Growth in
Operating cash flow is good as more inflow of cash is for the company which makes the company cash rich. A decrease in Operating cash flow
could be due to non-receipt of cash from debtors, excess cash operating cash expense, or payment to creditors in HDL the changes in operating
cash flow is due to an increase in debtors in comparison to the previous year.
–Cash Flow from Investing Activities: In this heading cash flow activities from investment/sales in Fixed assets, other companies, etc. is recorded,
In HDL’s case the increase of 160% is due to the purchase of fixed assets of a company.
–Cash Flow from Financing Activities: Increase/decrease in loans, borrowings, lease payment, divided paid, interest paid, etc. fluctuation under
this head of cash flow the fall in HDL is due to dividend and loan payment.
Below is the chart of fluctuation of Cash Flow Activities-Increase & Decreased
Return on Assets (ROA) Analysis: This analysis is done to know how much return or benefits the company derives from the assets.
HDL has a 24 % ROA in2017-18 which was 45 % (highest ever) but fell to 33% in the previous year HDL is increasing its assets
over the period the real impact and result of it will be so on year the end of 2079-80. The Net profit increased in 2021-22 (2078-79O
but ROA decreased in comparison to the previous year 2077-78.
Below is the chart & Table of Return on assets (ROA) & Assets.
“Summary of Financial Highlights”
The PE ratio (Price to earning) has jumped significantly in 5 years from 18 to 49 so in the period of 5 years normal public has also realized
the value of HDL and its future prospectus. Any company trading at a PE of 50 and having a book value of 149 must show
good growth and result continuously.
The above analysis has shown the mammoth and gold standard financial that Himalayan Distillery Limited has got due to every investor is
trying to get a PIE of HDL due to which the PE and valuation of HDL are high, so unless these gold standard figures are continued by HDL
the investment in HDL is waiting & watch for new investment.
Thank you For reading this work, in case of any criticism, suggestion, or appraisal please message or mail us and we will try to improve our work and analysis.
