ZENSAR TECHNOLOGIES 2020-21 Annual Report Analysis

Wed, 31 Mar

ZENSAR TECHNOLOGIES has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

ZENSAR TECHNOLOGIES Income Statement Analysis

• Operating income during the year fell 9.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 23.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.4% in FY21 as against 10.6% in FY20.
• Depreciation charges increased by 9.8% and finance costs decreased by 11.5% YoY, respectively.
• Other income declined by 23.3% YoY.
• Net profit for the year grew by 13.0% YoY.
• Net profit margins during the year grew from 6.5% in FY20 to 8.1% in FY21.

ZENSAR TECHNOLOGIES Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	41,817	37,814	-9.6%
Other income	Rs m	1,539	1,181	-23.3%
Total Revenues	Rs m	43,356	38,995	-10.1%
Gross profit	Rs m	4,416	5,431	23.0%
Depreciation	Rs m	1,592	1,747	9.8%
Interest	Rs m	605	535	-11.5%
Profit before tax	Rs m	3,758	4,329	15.2%
Tax	Rs m	1,042	1,260	20.9%
Profit after tax	Rs m	2,716	3,070	13.0%
Gross profit margin	%	10.6	14.4
Effective tax rate	%	27.7	29.1
Net profit margin	%	6.5	8.1

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ZENSAR TECHNOLOGIES Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 7 billion as compared to Rs 10 billion in FY20, thereby witnessing an decrease of -29.0%.
• Current assets fell 3% and stood at Rs 20 billion, while fixed assets fell 7% and stood at Rs 14 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 34 billion as against Rs 35 billion during FY20, thereby witnessing a fall of 5%.

ZENSAR TECHNOLOGIES Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	20,560	23,274	13.2
Current Liabilities	Rs m	10,394	7,384	-29.0
Long-term Debt	Rs m	654	0	-100.0
Total Liabilities	Rs m	35,459	33,842	-4.6
Current assets	Rs m	20,576	19,928	-3.2
Fixed Assets	Rs m	14,883	13,915	-6.5
Total Assets	Rs m	35,459	33,842	-4.6

ZENSAR TECHNOLOGIES Cash Flow Statement Analysis

• ZENSAR TECHNOLOGIES's cash flow from operating activities (CFO) during FY21 stood at Rs 9 billion, an improvement of 25.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -5 billion, an improvement of 67.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -5 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -1 billion from the Rs 2 billion net cash flows seen during FY20.

ZENSAR TECHNOLOGIES Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	6,862	8,580	25.0%
Cash Flow from Investing Activities	Rs m	-3,153	-5,283	-
Cash Flow from Financing Activities	Rs m	-1,968	-4,669	-
Net Cash Flow	Rs m	1,746	-1,391	-

Current Valuations for ZENSAR TECHNOLOGIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 13.6, an improvement from the EPS of Rs 12.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 274.3, stands at 20.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.7 times, while the price to sales ratio stands at 1.6 times.
• The company's price to cash flow (P/CF) ratio stood at 9.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	185.5	167.6
TTM Earnings per share	Rs	12.0	13.6
Diluted earnings per share	Rs	12.0	13.6
Price to Cash Flow	x	4.5	9.9
TTM P/E ratio	x	7.2	20.2
Price / Book Value ratio	x	1.8	2.1
Market Cap	Rs m	37,757	47,882
Dividends per share (Unadj.)	Rs	2.8	3.6

Ratio Analysis for ZENSAR TECHNOLOGIES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.7x during FY21, from 2.0x during FY20. 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 improved and stood at 9.1x during FY21, from 7.2x during FY20. 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 13.2% during FY21, from 13.2% during FY21. 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 20.9% during FY21, from 20.6% during FY20. 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 10.7% during FY21, from 9.4% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	2.0	2.7
Debtors’ Days	Days	581	568
Interest coverage	x	7.2	9.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.4	10.7
Return on equity	%	13.2	13.2
Return on capital employed	%	20.6	20.9

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

ZENSAR TECHNOLOGIES Share Price Performance

Over the last one year, ZENSAR TECHNOLOGIES share price has moved up from Rs 86.5 to Rs 274.3, registering a gain of Rs 187.8 or around 217.1%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

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

Read: Latest Annual Report Analysis of ZENSAR TECHNOLOGIES