HCL TECHNOLOGIES 2018-19 Annual Report Analysis

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HCL TECHNOLOGIES 2018-19 Annual Report Analysis
Mon, 9 Sep

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 decreased by 53.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.7% in FY19 as against 22.2% in FY18.
  • Depreciation charges increased by 49.9% and finance costs decreased by 74.8% YoY, respectively.
  • Other income grew by 674.9% YoY.
  • Net profit for the year grew by 16.0% YoY.
  • Net profit margins during the year declined from 16.8% in FY18 to 14.5% 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 12,170 94,300 674.9%
Total Revenues Rs m 517,860 698,570 34.9%
Gross profit Rs m 112,460 52,824 -53.0%
Depreciation Rs m 13,830 20,730 49.9%
Interest Rs m 690 174 -74.8%
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 87,220 101,200 16.0%
Gross profit margin % 22.2 8.7
Effective tax rate % 20.9 19.8
Net profit margin % 16.8 14.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



HCL TECHNOLOGIES Balance Sheet Analysis

  • The company's current liabilities during FY19 stood at Rs 116 billion as compared to Rs 101 billion in FY18, thereby witnessing an increase of 15.2%.
  • 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 21% and stood at Rs 231 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 586 billion as against Rs 480 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 363,860 413,660 13.7
 
Current Liabilities Rs m 101,070 116,474 15.2
Long-term Debt Rs m 3,380 29,770 780.8
Total Liabilities Rs m 480,230 585,750 22.0
 
Current assets Rs m 245,580 297,220 21.0
Fixed Assets Rs m 190,730 231,230 21.2
Total Assets Rs m 480,230 585,750 22.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 -14,620 -
Net Cash Flow Rs m 3,780 42,350 1,020.4%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 1,085.6, stands at 15.4 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 3.3 times, while the price to sales ratio stands at 2.2 times.
  • The company's price to cash flow (P/CF) ratio stood at 12.6 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 363.2 445.5
TTM Earnings per share Rs 62.6 74.6
Diluted earnings per share Rs 61.8 71.7
Price to Cash Flow x 15.0 12.6
TTM P/E ratio x 15.2 15.4
Price / Book Value ratio x 3.5 3.3
Market Cap Rs m 1,511,357 1,531,614
Dividends per share (Unadj.) Rs 12.0 8.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for HCL TECHNOLOGIES

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 2.6x 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 improved and stood at 726.4x 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 24.0% 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 28.5% 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 17.3% during FY19, from 18.3% 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 2.4 2.6
Debtors’ Days Days 70 71
Interest coverage x 160.6 726.4
Debt to equity ratio x 0.0 0.1
Return on assets % 18.3 17.3
Return on equity % 24.0 24.5
Return on capital employed % 30.2 28.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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 1,074.1 to Rs 1,085.6, registering a gain of Rs 11.5 or around 1.1%.

Meanwhile, the S&P BSE IT Index is trading at Rs 16,154.4 (down 0.6%). Over the last one year it has moved up from 15,780.7 to 16,154.4, a gain of 374 points (up 2.4%).

Overall, the S&P BSE SENSEX is down 2.7% over the year.

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

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