HCL TECHNOLOGIES 2022-23 Annual Report Analysis

Wed, 2 Aug

HCL TECHNOLOGIES has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

HCL TECHNOLOGIES Income Statement Analysis

• Operating income during the year rose 18.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 10.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 22.3% in FY23 as against 24.0% in FY22.
• Depreciation charges decreased by 4.2% and finance costs increased by 10.7% YoY, respectively.
• Other income grew by 27.2% YoY.
• Net profit for the year grew by 9.8% YoY.
• Net profit margins during the year declined from 15.8% in FY22 to 14.6% in FY23.

HCL TECHNOLOGIES Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	856,510	1,014,560	18.5%
Other income	Rs m	10,710	13,620	27.2%
Total Revenues	Rs m	867,220	1,028,180	18.6%
Gross profit	Rs m	205,250	226,240	10.2%
Depreciation	Rs m	43,260	41,450	-4.2%
Interest	Rs m	3,190	3,530	10.7%
Profit before tax	Rs m	169,510	194,880	15.0%
Tax	Rs m	34,280	46,430	35.4%
Profit after tax	Rs m	135,230	148,450	9.8%
Gross profit margin	%	24.0	22.3
Effective tax rate	%	20.2	23.8
Net profit margin	%	15.8	14.6

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HCL TECHNOLOGIES Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 214 billion as compared to Rs 188 billion in FY22, thereby witnessing an increase of 14.1%.
• Long-term debt down at Rs 21 billion as compared to Rs 39 billion during FY22, a fall of 46.2%.
• Current assets rose 12% and stood at Rs 536 billion, while fixed assets fell 3% and stood at Rs 386 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 922 billion as against Rs 879 billion during FY22, thereby witnessing a growth of 5%.

HCL TECHNOLOGIES Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	618,320	650,170	5.2
Current Liabilities	Rs m	187,750	214,310	14.1
Long-term Debt	Rs m	39,230	21,110	-46.2
Total Liabilities	Rs m	878,570	921,590	4.9
Current assets	Rs m	480,410	535,770	11.5
Fixed Assets	Rs m	398,160	385,820	-3.1
Total Assets	Rs m	878,570	921,590	4.9

HCL TECHNOLOGIES Cash Flow Statement Analysis

• HCL TECHNOLOGIES's cash flow from operating activities (CFO) during FY23 stood at Rs 180 billion, an improvement of 6.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -39 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -159 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -14 billion from the Rs 40 billion net cash flows seen during FY22.

HCL TECHNOLOGIES Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	169,000	180,090	6.6%
Cash Flow from Investing Activities	Rs m	14,770	-39,310	-
Cash Flow from Financing Activities	Rs m	-145,080	-158,810	-
Net Cash Flow	Rs m	39,890	-14,450	-

Current Valuations for HCL TECHNOLOGIES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 54.7, an improvement from the EPS of Rs 49.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,128.2, stands at 20.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.7 times, while the price to sales ratio stands at 3.0 times.
• The company's price to cash flow (P/CF) ratio stood at 14.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	315.6	373.9
TTM Earnings per share	Rs	49.8	54.7
Diluted earnings per share	Rs	49.8	54.7
Price to Cash Flow	x	17.7	14.9
TTM P/E ratio	x	23.3	20.3
Price / Book Value ratio	x	5.0	4.3
Market Cap	Rs m	3,077,635	2,820,380
Dividends per share (Unadj.)	Rs	42.0	48.0

Ratio Analysis for HCL TECHNOLOGIES

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.5x during FY23, from 2.6x during FY22. 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 56.2x during FY23, from 54.1x during FY22. 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 22.8% during FY23, from 21.9% during FY23. 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 29.6% during FY23, from 26.3% during FY22. 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 16.5% during FY23, from 15.8% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	2.6	2.5
Debtors’ Days	Days	7	7
Interest coverage	x	54.1	56.2
Debt to equity ratio	x	0.1	0.0
Return on assets	%	15.8	16.5
Return on equity	%	21.9	22.8
Return on capital employed	%	26.3	29.6

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 951.0 to Rs 1,128.2, registering a gain of Rs 177.2 or around 18.6%.

Meanwhile, the S&P BSE IT Index is trading at Rs 30,385.2 (down 0.7%). Over the last one year it has moved up from 29,425.5 to 30,385.2, a gain of 960 points (up 3.3%).

Overall, the S&P BSE SENSEX is up 13.2% over the year.

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