HCL TECHNOLOGIES 2017-18 Annual Report Analysis

Sat, 31 Mar

HCL TECHNOLOGIES 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 TECHNOLOGIES Income Statement Analysis

• Operating income during the year rose 6.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 8.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 22.2% in FY18 as against 21.8% in FY17.
• Depreciation charges increased by 67.0% and finance costs decreased by 22.5% YoY, respectively.
• Other income grew by 13.5% YoY.
• Net profit for the year grew by 1.2% YoY.
• Net profit margins during the year declined from 18.1% in FY17 to 17.2% in FY18.

HCL TECHNOLOGIES Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	475,680	505,690	6.3%
Other income	Rs m	10,780	12,240	13.5%
Total Revenues	Rs m	486,460	517,930	6.5%
Gross profit	Rs m	103,790	112,390	8.3%
Depreciation	Rs m	8,280	13,830	67.0%
Interest	Rs m	890	690	-22.5%
Profit before tax	Rs m	105,400	110,110	4.5%
Tax	Rs m	19,360	23,020	18.9%
Profit after tax	Rs m	86,040	87,090	1.2%
Gross profit margin	%	21.8	22.2
Effective tax rate	%	18.4	20.9
Net profit margin	%	18.1	17.2

For You: Midcap Stocks Research at Less than Its Launch Price

HCL TECHNOLOGIES Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 101 billion as compared to Rs 113 billion in FY17, thereby witnessing an decrease of -10.8%.
• Long-term debt down at Rs 3 billion as compared to Rs 4 billion during FY17, a fall of 11.7%.
• Current assets fell 7% and stood at Rs 246 billion, while fixed assets rose 23% and stood at Rs 216 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 462 billion as against Rs 441 billion during FY17, thereby witnessing a growth of 5%.

HCL TECHNOLOGIES Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	329,280	363,740	10.5
Current Liabilities	Rs m	113,350	101,070	-10.8
Long-term Debt	Rs m	3,830	3,380	-11.7
Total Liabilities	Rs m	441,100	461,860	4.7
Current assets	Rs m	264,630	245,580	-7.2
Fixed Assets	Rs m	176,470	216,280	22.6
Total Assets	Rs m	441,100	461,860	4.7

HCL TECHNOLOGIES Cash Flow Statement Analysis

• HCL TECHNOLOGIES's cash flow from operating activities (CFO) during FY18 stood at Rs 83 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -23 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -57 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 4 billion from the Rs 6 billion net cash flows seen during FY17.

HCL TECHNOLOGIES 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	89,950	83,280	-7.4%
Cash Flow from Investing Activities	Rs m	-38,330	-22,830	-
Cash Flow from Financing Activities	Rs m	-45,170	-57,140	-
Net Cash Flow	Rs m	5,880	3,780	-35.7%

Current Valuations for HCL TECHNOLOGIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 62.6, an improvement from the EPS of Rs 60.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 969.5, stands at 30.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.2 times, while the price to sales ratio stands at 2.7 times.
• The company's price to cash flow (P/CF) ratio stood at 12.7 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	333.4	363.2
TTM Earnings per share	Rs	60.3	62.6
Diluted earnings per share	Rs	31.7	32.1
Price to Cash Flow	x	25.1	12.7
TTM P/E ratio	x	69.6	30.2
Price / Book Value ratio	x	3.5	3.5
Market Cap	Rs m	1,138,680	1,279,474
Dividends per share (Unadj.)	Rs	24.0	12.0

Ratio Analysis for HCL TECHNOLOGIES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.4x during FY18, from 2.3x 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 improved and stood at 160.6x during FY18, from 119.4x 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 23.9% during FY18, from 26.1% 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 30.2% during FY18, from 31.9% 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 19.0% during FY18, from 19.7% 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	2.3	2.4
Debtors’ Days	Days	6	7
Interest coverage	x	119.4	160.6
Debt to equity ratio	x	0.0	0.0
Return on assets	%	19.7	19.0
Return on equity	%	26.1	23.9
Return on capital employed	%	31.9	30.2

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

HCL TECHNOLOGIES Share Price Performance

Over the last one year, HCL TECHNOLOGIES share price has moved up from Rs 873.1 to Rs 969.5, registering a gain of Rs 96.5 or around 11.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 12,100.6 (down 0.3%). Over the last one year it has moved up from 10,365.5 to 12,100.6, a gain of 1,735 points (up 16.7%).

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

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

Read: Latest Annual Report Analysis of HCL TECHNOLOGIES