HCL TECHNOLOGIES 2021-22 Annual Report Analysis

Wed, 27 Jul

HCL TECHNOLOGIES has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

HCL TECHNOLOGIES Income Statement Analysis

• Operating income during the year rose 13.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 2.5% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 24.0% in FY22 as against 26.6% in FY21.
• Depreciation charges decreased by 6.2% and finance costs decreased by 37.6% YoY, respectively.
• Other income grew by 12.7% YoY.
• Net profit for the year grew by 21.1% YoY.
• Net profit margins during the year grew from 14.8% in FY21 to 15.8% in FY22.

HCL TECHNOLOGIES Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	753,790	856,510	13.6%
Other income	Rs m	9,500	10,710	12.7%
Total Revenues	Rs m	763,290	867,220	13.6%
Gross profit	Rs m	200,250	205,260	2.5%
Depreciation	Rs m	46,110	43,260	-6.2%
Interest	Rs m	5,110	3,190	-37.6%
Profit before tax	Rs m	158,530	169,520	6.9%
Tax	Rs m	46,840	34,280	-26.8%
Profit after tax	Rs m	111,690	135,240	21.1%
Gross profit margin	%	26.6	24.0
Effective tax rate	%	29.5	20.2
Net profit margin	%	14.8	15.8

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HCL TECHNOLOGIES Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 188 billion as compared to Rs 174 billion in FY21, thereby witnessing an increase of 8.0%.
• Long-term debt stood at Rs 39 billion as compared to Rs 38 billion during FY21, a growth of 2.5%.
• Current assets rose 12% and stood at Rs 480 billion, while fixed assets fell 5% and stood at Rs 398 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 879 billion as against Rs 850 billion during FY21, thereby witnessing a growth of 3%.

HCL TECHNOLOGIES Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	599,130	618,320	3.2
Current Liabilities	Rs m	173,830	187,750	8.0
Long-term Debt	Rs m	38,280	39,230	2.5
Total Liabilities	Rs m	850,130	878,570	3.3
Current assets	Rs m	430,510	480,410	11.6
Fixed Assets	Rs m	419,620	398,160	-5.1
Total Assets	Rs m	850,130	878,570	3.3

HCL TECHNOLOGIES Cash Flow Statement Analysis

• HCL TECHNOLOGIES's cash flow from operating activities (CFO) during FY22 stood at Rs 169 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs 15 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -145 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 40 billion from the Rs 28 billion net cash flows seen during FY21.

HCL TECHNOLOGIES Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	196,180	169,000	-13.9%
Cash Flow from Investing Activities	Rs m	-57,300	14,770	-
Cash Flow from Financing Activities	Rs m	-111,920	-145,080	-
Net Cash Flow	Rs m	27,610	39,890	44.5%

Current Valuations for HCL TECHNOLOGIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 49.8, an improvement from the EPS of Rs 41.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 925.3, stands at 18.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.1 times, while the price to sales ratio stands at 2.9 times.
• The company's price to cash flow (P/CF) ratio stood at 17.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	277.8	315.6
TTM Earnings per share	Rs	41.2	49.8
Diluted earnings per share	Rs	41.2	49.8
Price to Cash Flow	x	16.9	17.2
TTM P/E ratio	x	23.9	18.5
Price / Book Value ratio	x	3.3	5.0
Market Cap	Rs m	1,998,886	3,077,635
Dividends per share (Unadj.)	Rs	10.0	42.0

Ratio Analysis for HCL TECHNOLOGIES

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.6x during FY22, from 2.5x during FY21. 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 54.1x during FY22, from 32.0x during FY21. 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 21.9% during FY22, from 18.6% during FY22. 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 improved and stood at 26.3% during FY22, from 25.7% during FY21. 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 improved and stood at 15.8% during FY22, from 13.7% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	2.5	2.6
Debtors’ Days	Days	7	7
Interest coverage	x	32.0	54.1
Debt to equity ratio	x	0.1	0.1
Return on assets	%	13.7	15.8
Return on equity	%	18.6	21.9
Return on capital employed	%	25.7	26.3

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 down from Rs 992.8 to Rs 925.3, registering a loss of Rs 67.5 or around 6.8%.

Meanwhile, the S&P BSE IT Index is trading at Rs 28,172.8 (up 0.9%). Over the last one year it has moved down from 30,597.6 to 28,172.8, a loss of 2,425 points (down 7.9%).

Overall, the S&P BSE SENSEX is up 5.2% 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