HCL TECHNOLOGIES 2018-19 Annual Report Analysis

Sun, 31 Mar

HCL TECHNOLOGIES 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 TECHNOLOGIES Income Statement Analysis

• Operating income during the year rose 19.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 23.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.0% in FY19 as against 22.2% in FY18.
• Depreciation charges increased by 49.9% and finance costs increased by 152.2% YoY, respectively.
• Other income declined by 22.1% YoY.
• Net profit for the year grew by 16.2% YoY.
• Net profit margins during the year declined from 17.2% in FY18 to 16.7% in FY19.

HCL TECHNOLOGIES Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	505,690	604,270	19.5%
Other income	Rs m	12,240	9,530	-22.1%
Total Revenues	Rs m	517,930	613,800	18.5%
Gross profit	Rs m	112,390	139,160	23.8%
Depreciation	Rs m	13,830	20,730	49.9%
Interest	Rs m	690	1,740	152.2%
Profit before tax	Rs m	110,110	126,220	14.6%
Tax	Rs m	23,020	25,020	8.7%
Profit after tax	Rs m	87,090	101,200	16.2%
Gross profit margin	%	22.2	23.0
Effective tax rate	%	20.9	19.8
Net profit margin	%	17.2	16.7

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HCL TECHNOLOGIES Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 123 billion as compared to Rs 101 billion in FY18, thereby witnessing an increase of 21.7%.
• Long-term debt stood at Rs 30 billion as compared to Rs 3 billion during FY18, a growth of 780.8%.
• Current assets rose 21% and stood at Rs 297 billion, while fixed assets rose 22% and stood at Rs 264 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 561 billion as against Rs 462 billion during FY18, thereby witnessing a growth of 22%.

HCL TECHNOLOGIES Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	363,740	413,610	13.7
Current Liabilities	Rs m	101,070	122,990	21.7
Long-term Debt	Rs m	3,380	29,770	780.8
Total Liabilities	Rs m	461,860	561,200	21.5
Current assets	Rs m	245,580	297,220	21.0
Fixed Assets	Rs m	216,280	263,980	22.1
Total Assets	Rs m	461,860	561,200	21.5

HCL TECHNOLOGIES Cash Flow Statement Analysis

• HCL TECHNOLOGIES's cash flow from operating activities (CFO) during FY19 stood at Rs 90 billion, an improvement of 7.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -31 billion, an improvement of 34.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -15 billion, an improvement of 74% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 42 billion from the Rs 4 billion net cash flows seen during FY18.

HCL TECHNOLOGIES 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	83,280	89,710	7.7%
Cash Flow from Investing Activities	Rs m	-22,830	-30,730	-
Cash Flow from Financing Activities	Rs m	-57,140	-14,710	-
Net Cash Flow	Rs m	3,780	42,440	1,022.8%

Current Valuations for HCL TECHNOLOGIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 74.6, an improvement from the EPS of Rs 62.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,088.0, stands at 29.2 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 2.4 times.
• The company's price to cash flow (P/CF) ratio stood at 11.1 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	363.2	445.5
TTM Earnings per share	Rs	62.6	74.6
Diluted earnings per share	Rs	32.1	37.3
Price to Cash Flow	x	26.1	11.1
TTM P/E ratio	x	30.2	29.2
Price / Book Value ratio	x	3.5	3.3
Market Cap	Rs m	1,279,474	1,359,331
Dividends per share (Unadj.)	Rs	12.0	8.0

Ratio Analysis for HCL TECHNOLOGIES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY19, from 2.4x 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 deteriorated and stood at 73.5x during FY19, from 160.6x 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 24.5% during FY19, from 23.9% 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 declined and down at 28.9% during FY19, from 30.2% 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 declined and down at 18.3% during FY19, from 19.0% 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	2.4	2.4
Debtors’ Days	Days	7	7
Interest coverage	x	160.6	73.5
Debt to equity ratio	x	0.0	0.1
Return on assets	%	19.0	18.3
Return on equity	%	23.9	24.5
Return on capital employed	%	30.2	28.9

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 969.5 to Rs 1,088.0, registering a gain of Rs 118.5 or around 12.2%.

Meanwhile, the S&P BSE IT Index is trading at Rs 15,280.3 (up 0.4%). Over the last one year it has moved up from 12,100.6 to 15,280.3, a gain of 3,180 points (up 26.3%).

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