MPHASIS 2022-23 Annual Report Analysis

Sun, 21 May

MPHASIS 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.

MPHASIS Income Statement Analysis

• Operating income during the year rose 15.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 14.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 17.6% in FY23 as against 17.7% in FY22.
• Depreciation charges increased by 11.9% and finance costs increased by 30.7% YoY, respectively.
• Other income grew by 0.7% YoY.
• Net profit for the year grew by 14.5% YoY.
• Net profit margins during the year declined from 12.0% in FY22 to 11.9% in FY23.

MPHASIS Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	119,614	137,985	15.4%
Other income	Rs m	1,605	1,616	0.7%
Total Revenues	Rs m	121,219	139,601	15.2%
Gross profit	Rs m	21,176	24,340	14.9%
Depreciation	Rs m	2,908	3,252	11.9%
Interest	Rs m	744	973	30.7%
Profit before tax	Rs m	19,129	21,731	13.6%
Tax	Rs m	4,820	5,351	11.0%
Profit after tax	Rs m	14,309	16,379	14.5%
Gross profit margin	%	17.7	17.6
Effective tax rate	%	25.2	24.6
Net profit margin	%	12.0	11.9

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MPHASIS Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 28 billion as compared to Rs 29 billion in FY22, thereby witnessing an decrease of -3.9%.
• Current assets rose 4% and stood at Rs 60 billion, while fixed assets rose 11% and stood at Rs 54 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 114 billion as against Rs 106 billion during FY22, thereby witnessing a growth of 7%.

MPHASIS Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	68,317	77,311	13.2
Current Liabilities	Rs m	29,100	27,978	-3.9
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	105,945	113,672	7.3
Current assets	Rs m	57,164	59,530	4.1
Fixed Assets	Rs m	48,782	54,142	11.0
Total Assets	Rs m	105,945	113,672	7.3

MPHASIS Cash Flow Statement Analysis

• MPHASIS's cash flow from operating activities (CFO) during FY23 stood at Rs 15 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -14 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 2 billion from the Rs 557 million net cash flows seen during FY22.

MPHASIS 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	17,157	14,618	-14.8%
Cash Flow from Investing Activities	Rs m	-2,820	1,825	-
Cash Flow from Financing Activities	Rs m	-13,887	-14,402	-
Net Cash Flow	Rs m	557	2,173	290.0%

Current Valuations for MPHASIS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 86.9, an improvement from the EPS of Rs 76.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,907.9, stands at 22.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.7 times, while the price to sales ratio stands at 2.6 times.
• The company's price to cash flow (P/CF) ratio stood at 24.3 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	636.9	732.4
TTM Earnings per share	Rs	76.2	86.9
Diluted earnings per share	Rs	75.9	86.9
Price to Cash Flow	x	37.0	24.3
TTM P/E ratio	x	44.5	22.0
Price / Book Value ratio	x	7.2	6.2
Market Cap	Rs m	494,256	478,023
Dividends per share (Unadj.)	Rs	46.0	50.0

Ratio Analysis for MPHASIS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.1x during FY23, from 2.0x 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 23.3x during FY23, from 26.7x 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 improved and stood at 21.2% during FY23, from 20.9% 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 29.4% during FY23, from 29.1% 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 improved and stood at 15.3% during FY23, from 14.2% 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	2.0	2.1
Debtors’ Days	Days	30	67
Interest coverage	x	26.7	23.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	14.2	15.3
Return on equity	%	20.9	21.2
Return on capital employed	%	29.1	29.4

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

MPHASIS Share Price Performance

Over the last one year, MPHASIS share price has moved down from Rs 2,458.8 to Rs 1,907.9, registering a loss of Rs 550.9 or around 22.4%.

Meanwhile, the S&P BSE IT Index is trading at Rs 28,228.4 (up 1.4%). Over the last one year it has moved down from 29,308.2 to 28,228.4, a loss of 1,080 points (down 3.7%).

Overall, the S&P BSE SENSEX is up 13.9% over the year.

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