COFORGE 2022-23 Annual Report Analysis

Wed, 14 Jun

COFORGE has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

COFORGE Income Statement Analysis

• Operating income during the year rose 24.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 11.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 15.3% in FY23 as against 17.1% in FY22.
• Depreciation charges increased by 13.8% and finance costs increased by 24.0% YoY, respectively.
• Other income grew by 19.5% YoY.
• Net profit for the year grew by 4.3% YoY.
• Net profit margins during the year declined from 11.1% in FY22 to 9.3% in FY23.

COFORGE Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	64,320	80,146	24.6%
Other income	Rs m	518	619	19.5%
Total Revenues	Rs m	64,838	80,765	24.6%
Gross profit	Rs m	11,019	12,284	11.5%
Depreciation	Rs m	2,272	2,585	13.8%
Interest	Rs m	650	806	24.0%
Profit before tax	Rs m	8,615	9,512	10.4%
Tax	Rs m	1,468	2,061	40.4%
Profit after tax	Rs m	7,147	7,451	4.3%
Gross profit margin	%	17.1	15.3
Effective tax rate	%	17.0	21.7
Net profit margin	%	11.1	9.3

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COFORGE Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 17 billion as compared to Rs 12 billion in FY22, thereby witnessing an increase of 47.5%.
• Long-term debt stood at Rs 3 billion as compared to Rs 3 billion during FY22, a growth of 0.5%.
• Current assets rose 17% and stood at Rs 26 billion, while fixed assets rose 12% and stood at Rs 41 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 67 billion as against Rs 59 billion during FY22, thereby witnessing a growth of 14%.

COFORGE Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	26,756	29,941	11.9
Current Liabilities	Rs m	11,792	17,393	47.5
Long-term Debt	Rs m	3,365	3,382	0.5
Total Liabilities	Rs m	58,898	67,189	14.1
Current assets	Rs m	22,209	26,064	17.4
Fixed Assets	Rs m	36,689	41,125	12.1
Total Assets	Rs m	58,898	67,189	14.1

COFORGE Cash Flow Statement Analysis

• COFORGE's cash flow from operating activities (CFO) during FY23 stood at Rs 10 billion, an improvement of 24.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -3 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -6 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 1 billion from the Rs -4 billion net cash flows seen during FY22.

COFORGE Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	7,656	9,505	24.2%
Cash Flow from Investing Activities	Rs m	-9,564	-2,716	-
Cash Flow from Financing Activities	Rs m	-1,558	-5,582	-
Net Cash Flow	Rs m	-3,531	1,231	-

Current Valuations for COFORGE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 122.0, an improvement from the EPS of Rs 117.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 4,536.3, stands at 37.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 9.3 times, while the price to sales ratio stands at 3.5 times.
• The company's price to cash flow (P/CF) ratio stood at 23.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	1,056.0	1,311.9
TTM Earnings per share	Rs	117.3	122.0
Diluted earnings per share	Rs	117.0	122.0
Price to Cash Flow	x	28.9	23.8
TTM P/E ratio	x	38.1	37.2
Price / Book Value ratio	x	10.2	8.0
Market Cap	Rs m	271,671	238,681
Dividends per share (Unadj.)	Rs	52.0	64.0

Ratio Analysis for COFORGE

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.5x during FY23, from 1.9x during FY22. 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 deteriorated and stood at 12.8x during FY23, from 14.3x during FY22. 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 declined and down at 24.9% during FY23, from 26.7% during FY23. 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 31.0% during FY23, from 30.8% during FY22. 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 declined and down at 12.3% during FY23, from 13.2% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.9	1.5
Debtors’ Days	Days	79	73
Interest coverage	x	14.3	12.8
Debt to equity ratio	x	0.1	0.1
Return on assets	%	13.2	12.3
Return on equity	%	26.7	24.9
Return on capital employed	%	30.8	31.0

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

COFORGE Share Price Performance

Over the last one year, COFORGE share price has moved up from Rs 3,233.8 to Rs 4,536.3, registering a gain of Rs 1,302.6 or around 40.3%.

Meanwhile, the S&P BSE IT Index is trading at Rs 29,055.9 (down 0.6%). Over the last one year it has moved up from 28,412.7 to 29,055.9, a gain of 643 points (up 2.3%).

Overall, the S&P BSE SENSEX is up 19.3% over the year.

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