HCL INFOSYS 2017-18 Annual Report Analysis

Sat, 31 Mar

HCL INFOSYS has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

HCL INFOSYS Income Statement Analysis

• Operating income during the year rose 10.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 170.8% YoY during the fiscal. Operating profit margins witnessed a growth and stood at 18.5% in FY18 as against 7.6% in FY17.
• Depreciation charges decreased by 11.7% and finance costs decreased by 7.5% YoY, respectively.
• Other income declined by 10.4% YoY.
• Net profit for the year grew by 228.6% YoY.
• Net profit margins during the year declined from 7.7% in FY17 to 22.8% in FY18.

HCL INFOSYS Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	32,252	35,646	10.5%
Other income	Rs m	1,459	1,307	-10.4%
Total Revenues	Rs m	33,710	36,953	9.6%
Gross profit	Rs m	-2,441	-6,610	170.8%
Depreciation	Rs m	311	275	-11.7%
Interest	Rs m	1,634	1,511	-7.5%
Profit before tax	Rs m	-2,927	-7,089	142.2%
Tax	Rs m	-450	1,049	-333.1%
Profit after tax	Rs m	-2,477	-8,138	228.6%
Gross profit margin	%	-7.6	-18.5
Effective tax rate	%	15.4	-14.8
Net profit margin	%	-7.7	-22.8

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HCL INFOSYS Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 25 billion as compared to Rs 22 billion in FY17, thereby witnessing an increase of 12.2%.
• Long-term debt down at Rs 2 billion as compared to Rs 4 billion during FY17, a fall of 59.1%.
• Current assets rose 16% and stood at Rs 24 billion, while fixed assets fell 51% and stood at Rs 5 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 29 billion as against Rs 31 billion during FY17, thereby witnessing a fall of 6%.

HCL INFOSYS Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	5,494	2,353	-57.2
Current Liabilities	Rs m	22,017	24,707	12.2
Long-term Debt	Rs m	4,132	1,692	-59.1
Total Liabilities	Rs m	30,713	28,750	-6.4
Current assets	Rs m	20,402	23,680	16.1
Fixed Assets	Rs m	10,311	5,070	-50.8
Total Assets	Rs m	30,713	28,750	-6.4

HCL INFOSYS Cash Flow Statement Analysis

• HCL INFOSYS's cash flow from operating activities (CFO) during FY18 stood at Rs -4 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 921 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 2 billion, an improvement of 273% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -223 million from the Rs -608 million net cash flows seen during FY17.

HCL INFOSYS Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	773	-3,508	-
Cash Flow from Investing Activities	Rs m	-27	921	-
Cash Flow from Financing Activities	Rs m	-1,354	2,347	-
Net Cash Flow	Rs m	-608	-223	-

Current Valuations for HCL INFOSYS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -24.7, an decline from the EPS of Rs -11.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 51.0, stands at -2.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.1 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at -2.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	144.7	108.3
TTM Earnings per share	Rs	-11.1	-24.7
Diluted earnings per share	Rs	-7.5	-24.7
Price to Cash Flow	x	-7.9	-2.3
TTM P/E ratio	x	-9.2	-2.6
Price / Book Value ratio	x	2.0	7.7
Market Cap	Rs m	11,241	18,049
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for HCL INFOSYS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x during FY18, from 0.9x during FY17. 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 -3.7x during FY18, from -0.8x during FY17. 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 -345.8% during FY18, from -45.1% during FY18. 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 declined and down at -137.9% during FY18, from -13.4% during FY17. 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 -23.0% during FY18, from -2.7% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	0.9	1.0
Debtors’ Days	Days	15	13
Interest coverage	x	-0.8	-3.7
Debt to equity ratio	x	0.8	0.7
Return on assets	%	-2.7	-23.0
Return on equity	%	-45.1	-345.8
Return on capital employed	%	-13.4	-137.9

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

HCL INFOSYS Share Price Performance

Over the last one year, HCL INFOSYS share price has moved down from Rs 52.3 to Rs 51.0, registering a loss of Rs 1.3 or around 2.5%.

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of HCL INFOSYS