Hero FinCorp Growth

Revenue of the company has seen a huge fall of 23.5%. The major reason for the same was increase in provision for loan losses by company, as in covid 19 chances of defaults on consumer as well as corporate loans increased. But interest earnings of the company increased by around 13.5% specifically due to improved in retail segment.  A total of over 10 Lakh of two wheeler loans were disbursed in FY21, while Rs.4,206 Cr. worth of loans were disbursed to corporates during the year.

The company was highly affected by covid pandemic, but in second half of FY21 as the situation improved company geared up and showed satisfying results. Overall income of the company increased including interest income as well as other miscellaneous income, while Interest expense saw a rise of 5%. Overall results were positive but due to provisions and restrictions applied by RBI and government, company increased their provision expense which led to a fall in net profit of the company.

In FY21 EPS of the company has decreased by 82.5%, which is a huge fall for the company. The major reason behind the fall was increase in bad debts by its customers. Due to this company had to increase balance in their provision for loan losses account.

Equity of the company has increased this year due to shift of partially paid up equity shares of Rs. 5 and Rs. 5.6 to the fully paid up shares of Rs.10 each. This increased the amount of common equity shares but no. of shares of the company remained constant. While company had to increase its security premium and other reserves due to volatile and risky market conditions created by the pandemic and due to certain guidelines published by RBI related to loan moratorium. 

Operating profit of the company deteriorated in FY21, as after pandemic company faced many loan defaulters, and had to manage settlement loss and bad debts of worth around 1,417.74Cr. which led to the significant fall in its revenue. on the same hand other expenses including loan collection charges, IT charges and contractual staff cost all increased, while company tried to reduce to its permanent employee benefits expense.

During the FY21, the Company had invested an amount of Rs.100 Cr. into Hero Housing Finance Limited (HHFL), by way of making payment towards First & Final call money on 20,83,33,333 partly paid equity shares, also they invested in many other government securities and mutual funds, to secure the money in this volatile market. Currently they are working on betterment of their fixed assets as well by improving data processing equipment.

Cash flow from operating activities of the company has improved this year but is still negative. The improvement was led by decrease in trade receivables and loans, while trade payables and other financial liability of the company has increased. This improved the free cash flow of the company from its previous years.