HCL TECHNOLOGIES 2020-21 Annual Report Analysis

Wed, 31 Mar

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 15.6% in FY20 to 14.8% 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	%	15.6	14.8

Don't Miss: Best Chance to Access Midcap Stocks Research at 80% OFF

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

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	-

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 983.5, stands at 23.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.5 times, while the price to sales ratio stands at 3.5 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-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	8.2	12.7
TTM P/E ratio	x	10.7	23.9
Price / Book Value ratio	x	4.1	3.3
Market Cap	Rs m	2,124,121	1,998,886
Dividends per share (Unadj.)	Rs	10.0	10.0

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

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 436.8 to Rs 983.5, registering a gain of Rs 546.7 or around 125.2%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

Overall, the S&P BSE SENSEX is up 74.1% 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