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HCL TECH. 2017-18 Annual Report Analysis

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HCL TECH. 2017-18 Annual Report Analysis
Tue, 18 Dec

HCL TECH. 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 TECH. 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 22.6% YoY, respectively.
  • Other income grew by 13.4% YoY.
  • Net profit for the year grew by 1.3% YoY.
  • Net profit margins during the year declined from 17.7% in FY17 to 16.8% in FY18.

HCL TECH. Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 475,675 505,690 6.3%
Other income Rs m 10,733 12,170 13.4%
Total Revenues Rs m 486,409 517,860 6.5%
Gross profit Rs m 103,846 112,460 8.3%
Depreciation Rs m 8,281 13,830 67.0%
Interest Rs m 891 690 -22.6%
Profit before tax Rs m 105,407 110,110 4.5%
Tax Rs m 19,363 23,020 18.9%
Profit after tax Rs m 86,065 87,220 1.3%
Gross profit margin % 21.8 22.2
Effective tax rate % 18.4 20.9
Net profit margin % 17.7 16.8
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



HCL TECH. 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 -10.9%.
  • Long-term debt down at Rs 3 billion as compared to Rs 4 billion during FY17, a fall of 11.7%.
  • Current assets fell 8% and stood at Rs 244 billion, while fixed assets rose 21% and stood at Rs 191 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 480 billion as against Rs 458 billion during FY17, thereby witnessing a growth of 5%.

HCL TECH. Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 329,499 363,860 10.4
 
Current Liabilities Rs m 113,417 101,070 -10.9
Long-term Debt Rs m 3,826 3,380 -11.7
Total Liabilities Rs m 457,694 480,230 4.9
 
Current assets Rs m 264,698 243,860 -7.9
Fixed Assets Rs m 158,097 190,730 20.6
Total Assets Rs m 457,694 480,230 4.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



HCL TECH. Cash Flow Statement Analysis

  • HCL TECH.'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 TECH. 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 89,951 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 5,881 3,780 -35.7%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for HCL TECH.

  • 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 977.6, stands at 14.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.5 times, while the price to sales ratio stands at 2.5 times.
  • The company's price to cash flow (P/CF) ratio stood at 13.7 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 61.0 61.8
Price to Cash Flow x 14.8 13.7
TTM P/E ratio x 15.0 14.9
Price / Book Value ratio x 3.5 3.5
Market Cap Rs m 1,394,749 1,379,236
Dividends per share (Unadj.) Rs 24.0 12.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for HCL TECH.

  • 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 deteriorated and stood at 160.6x during FY18, from 119.3x 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 24.0% 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 18.3% during FY18, from 19.0% 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 64 70
Interest coverage x 119.3 160.6
Debt to equity ratio x 0.0 0.0
Return on assets % 19.0 18.3
Return on equity % 26.1 24.0
Return on capital employed % 31.9 30.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

HCL TECH. Share Price Performance

Over the last one year, HCL TECH. share price has moved up from Rs 885.2 to Rs 977.6, registering a gain of Rs 92.4 or around 10.4%.

Meanwhile, the S&P BSE IT Index is trading at Rs 14,444.1 (down 1.1%). Over the last one year it has moved up from 10,905.4 to 14,444.1, a gain of 3,539 points (up 32.4%).

Overall, the S&P BSE SENSEX is up 7.4% over the year.

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

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For the quarter ended December 2018, HCL TECH. has posted a net profit of Rs 26 bn (up 25.5% YoY). Sales on the other hand came in at Rs 157 bn (up 22.6% YoY). Read on for a complete analysis of HCL TECH.'s quarterly results.

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