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HCL INFOSYS 2018-19 Annual Report Analysis

Tue, 24 Sep

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 21.8% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 27.6% YoY during the fiscal. Operating profit margins witnessed a growth and down at 2.2% in FY19 as against 3.8% in FY18.
• Depreciation charges decreased by 21.2% and finance costs decreased by 12.8% YoY, respectively.
• Other income declined by 21.7% YoY.
• Net profit for the year declined by 29.2% YoY.
• Net profit margins during the year grew from 5.6% in FY18 to 3.3% 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	43,400	21.8%
Other income	Rs m	1,307	1,024	-21.7%
Total Revenues	Rs m	36,954	44,424	20.2%
Gross profit	Rs m	-1,342	-971	-27.6%
Depreciation	Rs m	275	216	-21.2%
Interest	Rs m	1,411	1,230	-12.8%
Profit before tax	Rs m	-1,721	-1,395	-19.0%
Tax	Rs m	51	82	61.6%
Profit after tax	Rs m	-2,086	-1,477	-29.2%
Gross profit margin	%	-3.8	-2.2
Effective tax rate	%	-3.0	-5.9
Net profit margin	%	-5.6	-3.3

HCL INFOSYS Balance Sheet Analysis

• The company's current liabilities during FY19 down at Rs 18 billion as compared to Rs 24 billion in FY18, thereby witnessing an decrease of -24.9%.
• Long-term debt down at Rs 991 million as compared to Rs 2 billion during FY18, a fall of 41.4%.
• Current assets fell 33% and stood at Rs 14 billion, while fixed assets fell 15% and stood at Rs 1 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	23,718	17,808	-24.9
Long-term Debt	Rs m	1,692	991	-41.4
Total Liabilities	Rs m	28,797	19,974	-30.6
Current assets	Rs m	21,413	14,327	-33.1
Fixed Assets	Rs m	1,676	1,420	-15.3
Total Assets	Rs m	28,797	19,974	-30.6

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 1 billion, an improvement of 39.6% 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 384 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	3,871	-
Cash Flow from Investing Activities	Rs m	921	1,286	39.6%
Cash Flow from Financing Activities	Rs m	2,347	-4,771	-
Net Cash Flow	Rs m	-223	384	-

Current Valuations for HCL INFOSYS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -4.5, an improvement from the EPS of Rs -6.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 8.5, stands at -1.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 11.5 times, while the price to sales ratio stands at 0.3 times.
• The company's price to cash flow (P/CF) ratio stood at -1.5 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	131.8
TTM Earnings per share	Rs	-6.3	-4.5
Diluted earnings per share	Rs	-9.4	-6.6
Price to Cash Flow	x	-1.6	-1.5
TTM P/E ratio	x	-1.9	-1.3
Price / Book Value ratio	x	7.5	11.5
Market Cap	Rs m	2,811	1,904
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 0.9x 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 -0.2x 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 declined and down at -141.8% during FY19, from -88.6% 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 -8.1% during FY19, from -15.4% 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 -1.2% during FY19, from -2.3% 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	0.9	0.8
Debtors’ Days	Days	132	48
Interest coverage	x	-0.2	-0.1
Debt to equity ratio	x	0.7	1.0
Return on assets	%	-2.3	-1.2
Return on equity	%	-88.6	-141.8
Return on capital employed	%	-15.4	-8.1

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 25.9 to Rs 8.5, registering a loss of Rs 17.4 or around 67.0%.

Overall, the S&P BSE SENSEX is up 8.0% over the year.

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