Himalayan Distillery Limited (HDL) has staged a strong recovery in profitability after a sharp downturn earlier in the review period, with Q4 2082/83 marking the company’s strongest net profit performance across the nine-year period examined.

The company’s net profit reached Rs. 1.21 billion in Q4 2082/83, up substantially from Rs. 353.05 million in Q4 2080/81. Profit had previously peaked at Rs. 1.06 billion in Q4 2078/79 before falling sharply, making the latest recovery particularly significant.

The recovery was supported by a sharp improvement in revenue. Revenue from the sale of goods increased to Rs. 8.11 billion, the highest level in the review period, from Rs. 2.08 billion in Q4 2080/81. Overall, revenue increased around 235% from Rs. 2.42 billion in Q4 2074/75.

Gross profit also recovered strongly, reaching Rs. 3.06 billion in Q4 2082/83. After falling to Rs. 1.35 billion in Q4 2080/81, gross profit more than doubled as sales recovered. Operating profit similarly climbed to Rs. 1.68 billion, the strongest level in the review period.
The improvement, however, has not been a straight-line expansion in margins. Gross profit margin stood at 37.70% in Q4 2082/83, improving from the previous year but remaining below the 64.87% recorded in Q4 2080/81. Net profit margin improved to 14.86%, from 13.24% in Q4 2081/82.

The balance sheet has expanded significantly alongside the recovery. Total assets increased from Rs. 1.19 billion to Rs. 5.77 billion, a roughly 385% increase over the review period. Current assets were the biggest driver, rising around 712% to Rs. 4.43 billion in Q4 2082/83.

Equity also expanded sharply, reaching Rs. 5.22 billion from Rs. 794.65 million. Equity represented around 90.3% of total equity and liabilities in the latest year, indicating that the company’s capital structure remains heavily equity-funded.

Liquidity remains another strength. HDL’s current ratio stood at 9.37 times in Q4 2082/83. Although lower than its 10.88-times peak in Q4 2079/80, the ratio remained well above 1 throughout the review period, indicating substantial current-asset coverage of short-term liabilities.

Per-share earnings have also recovered, although they remain well below the earlier peak. EPS rose to Rs. 32.71 in Q4 2082/83 from Rs. 13.21 in Q4 2080/81. The earlier high was Rs. 139.26 in Q4 2075/76, showing how significantly earnings per share have changed over the period.

Return metrics tell a similar recovery story. ROE fell to 10.56% in Q4 2080/81 as profitability weakened and equity expanded, but recovered to 23.13% in Q4 2082/83. ROA also improved to 20.90%, from 9.72% at its low point in Q4 2080/81.

The company has also maintained a variable dividend history. Total dividend reached 102.63% in FY 2075/76 and remained at 100% in the following two fiscal years before falling sharply. It declined to 20% in FY 2080/81 and later recovered to 25% in FY 2081/82.

The nine-year numbers therefore show two different phases for HDL. The company experienced a significant earnings and return compression around Q4 2080/81, followed by a strong recovery in revenue, operating profit, net profit and return ratios over the subsequent two years.

The latest results put HDL at its strongest absolute profit level in the review period, but the longer-term per-share and margin figures show that the recovery is more nuanced. Revenue and profit have returned strongly, while EPS and profitability ratios remain below some of the company’s earlier highs.