HCL TECHNOLOGIES 2020-21 Annual Report Analysis

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HCL TECHNOLOGIES 2020-21 Annual Report Analysis
Wed, 20 Oct

HCL TECHNOLOGIES has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

HCL TECHNOLOGIES Income Statement Analysis

  • Operating income during the year rose 6.7% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 15.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 26.6% in FY21 as against 24.5% in FY20.
  • Depreciation charges increased by 34.8% and finance costs increased by 1.2% YoY, respectively.
  • Other income grew by 53.5% YoY.
  • Net profit for the year grew by 1.0% YoY.
  • Net profit margins during the year declined from 15.5% in FY20 to 14.6% in FY21.

HCL TECHNOLOGIES Income Statement 2020-21

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Net Sales Rs m 706,760 753,790 6.7%
Other income Rs m 6,190 9,500 53.5%
Total Revenues Rs m 712,950 763,290 7.1%
Gross profit Rs m 172,860 200,250 15.8%
Depreciation Rs m 34,200 46,110 34.8%
Interest Rs m 5,050 5,110 1.2%
Profit before tax Rs m 139,800 158,530 13.4%
Tax Rs m 29,230 46,840 60.2%
Profit after tax Rs m 110,570 111,690 1.0%
Gross profit margin % 24.5 26.6
Effective tax rate % 20.9 29.5
Net profit margin % 15.5 14.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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HCL TECHNOLOGIES Balance Sheet Analysis

  • The company's current liabilities during FY21 down at Rs 174 billion as compared to Rs 237 billion in FY20, thereby witnessing an decrease of -26.7%.
  • Long-term debt stood at Rs 38 billion as compared to Rs 28 billion during FY20, a growth of 34.4%.
  • Current assets rose 12% and stood at Rs 431 billion, while fixed assets fell 0% and stood at Rs 420 billion in FY21.
  • Overall, the total assets and liabilities for FY21 stood at Rs 850 billion as against Rs 806 billion during FY20, thereby witnessing a growth of 5%.

HCL TECHNOLOGIES Balance Sheet as on March 2021

No. of Mths Year Ending 12 Mar-20* 12 Mar-21* % Change
Networth Rs m 512,670 599,130 16.9
 
Current Liabilities Rs m 237,300 173,830 -26.7
Long-term Debt Rs m 28,480 38,280 34.4
Total Liabilities Rs m 805,890 850,130 5.5
 
Current assets Rs m 384,200 430,510 12.1
Fixed Assets Rs m 421,690 419,620 -0.5
Total Assets Rs m 805,890 850,130 5.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



HCL TECHNOLOGIES Cash Flow Statement Analysis

  • HCL TECHNOLOGIES's cash flow from operating activities (CFO) during FY21 stood at Rs 196 billion, an improvement of 46.9% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY21 stood at Rs -57 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY21 stood at Rs -112 billion on a YoY basis.
  • Overall, net cash flows for the company during FY21 stood at Rs 28 billion from the Rs -21 billion net cash flows seen during FY20.

HCL TECHNOLOGIES Cash Flow Statement 2020-21

Particulars No. of months 12 12 % Change
Year Ending Mar-20 Mar-21
Cash Flow from Operating Activities Rs m 133,590 196,180 46.9%
Cash Flow from Investing Activities Rs m -123,740 -57,420 -
Cash Flow from Financing Activities Rs m -31,680 -111,800 -
Net Cash Flow Rs m -21,410 27,610 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for HCL TECHNOLOGIES

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 41.2, an improvement from the EPS of Rs 40.7 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,232.3, stands at 28.9 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 2.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 21.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-20* 12 Mar-21*
Sales per share (Unadj.) Rs 260.4 277.8
TTM Earnings per share Rs 40.7 41.2
Diluted earnings per share Rs 40.7 41.2
Price to Cash Flow x 23.1 21.2
TTM P/E ratio x 28.9 28.9
Price / Book Value ratio x 4.1 3.3
Market Cap Rs m 3,344,050 3,344,050
Dividends per share (Unadj.) Rs 10.0 10.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for HCL TECHNOLOGIES

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 2.5x during FY21, from 1.6x during FY20. 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 32.0x during FY21, from 28.7x during FY20. 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 18.6% during FY21, from 21.6% during FY21. 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 25.7% during FY21, from 26.8% during FY20. 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 13.7% during FY21, from 14.3% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-20* 12 Mar-21*
Current ratio x 1.6 2.5
Debtors’ Days Days 7 7
Interest coverage x 28.7 32.0
Debt to equity ratio x 0.1 0.1
Return on assets % 14.3 13.7
Return on equity % 21.6 18.6
Return on capital employed % 26.8 25.7
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 880.1 to Rs 1,232.3, registering a gain of Rs 352.3 or around 40.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 35,864.6 (down 1.0%). Over the last one year it has moved up from 22,040.6 to 35,864.6, a gain of 13,824 points (up 62.7%).

Overall, the S&P BSE SENSEX is up 51.5% over the year.

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

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