HCL INFOSYS 2018-19 Annual Report Analysis

Sun, 31 Mar

HCL INFOSYS has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

HCL INFOSYS Income Statement Analysis

• Operating income during the year rose 23.2% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 89.0% YoY during the fiscal. Operating profit margins witnessed a growth and down at 1.7% in FY19 as against 18.5% in FY18.
• Depreciation charges decreased by 20.1% and finance costs decreased by 10.6% YoY, respectively.
• Other income declined by 21.1% YoY.
• Net profit for the year declined by 83.4% YoY.
• Net profit margins during the year grew from 22.8% in FY18 to 3.1% in FY19.

HCL INFOSYS Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	35,646	43,921	23.2%
Other income	Rs m	1,307	1,031	-21.1%
Total Revenues	Rs m	36,953	44,953	21.6%
Gross profit	Rs m	-6,610	-729	-89.0%
Depreciation	Rs m	275	219	-20.1%
Interest	Rs m	1,511	1,351	-10.6%
Profit before tax	Rs m	-7,089	-1,268	-82.1%
Tax	Rs m	1,049	84	-92.0%
Profit after tax	Rs m	-8,138	-1,352	-83.4%
Gross profit margin	%	-18.5	-1.7
Effective tax rate	%	-14.8	-6.6
Net profit margin	%	-22.8	-3.1

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HCL INFOSYS Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 18 billion as compared to Rs 25 billion in FY18, thereby witnessing an decrease of -27.4%.
• Long-term debt down at Rs 991 million as compared to Rs 2 billion during FY18, a fall of 41.4%.
• Current assets fell 40% and stood at Rs 14 billion, while fixed assets rose 13% and stood at Rs 6 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 20 billion as against Rs 29 billion during FY18, thereby witnessing a fall of 31%.

HCL INFOSYS Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	2,353	1,042	-55.7
Current Liabilities	Rs m	24,707	17,938	-27.4
Long-term Debt	Rs m	1,692	991	-41.4
Total Liabilities	Rs m	28,750	19,935	-30.7
Current assets	Rs m	23,680	14,228	-39.9
Fixed Assets	Rs m	5,070	5,707	12.6
Total Assets	Rs m	28,750	19,935	-30.7

HCL INFOSYS Cash Flow Statement Analysis

• HCL INFOSYS's cash flow from operating activities (CFO) during FY19 stood at Rs 4 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 112 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -5 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs -254 million from the Rs -223 million net cash flows seen during FY18.

HCL INFOSYS Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	-3,508	4,406	-
Cash Flow from Investing Activities	Rs m	921	112	-87.8%
Cash Flow from Financing Activities	Rs m	2,347	-4,771	-
Net Cash Flow	Rs m	-223	-254	-

Current Valuations for HCL INFOSYS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -4.1, an improvement from the EPS of Rs -24.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 19.1, stands at -4.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.0 times, while the price to sales ratio stands at 0.1 times.
• The company's price to cash flow (P/CF) ratio stood at -10.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	108.3	133.4
TTM Earnings per share	Rs	-24.7	-4.1
Diluted earnings per share	Rs	-24.7	-4.1
Price to Cash Flow	x	-2.1	-10.6
TTM P/E ratio	x	-2.6	-4.2
Price / Book Value ratio	x	7.7	11.6
Market Cap	Rs m	18,049	12,057
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for HCL INFOSYS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY19, from 1.0x during FY18. 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 0.1x during FY19, from -3.7x during FY18. 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 -129.8% during FY19, from -345.8% during FY19. 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 4.1% during FY19, from -137.9% during FY18. 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 0.0% during FY19, from -23.0% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	1.0	0.8
Debtors’ Days	Days	13	5
Interest coverage	x	-3.7	0.1
Debt to equity ratio	x	0.7	1.0
Return on assets	%	-23.0	0.0
Return on equity	%	-345.8	-129.8
Return on capital employed	%	-137.9	4.1

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 51.0 to Rs 19.1, registering a loss of Rs 32.0 or around 62.6%.

Overall, the S&P BSE SENSEX is up 16.3% 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