INFOSYS 2019-20 Annual Report Analysis

Tue, 31 Mar

INFOSYS has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

INFOSYS Income Statement Analysis

• Operating income during the year rose 9.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 7.9% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 24.0% in FY20 as against 24.4% in FY19.
• Depreciation charges increased by 43.9% increased by 0.0% YoY, respectively.
• Other income grew by 15.0% YoY.
• Net profit for the year grew by 8.0% YoY.
• Net profit margins during the year declined from 18.6% in FY19 to 18.3% in FY20.

INFOSYS Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	826,750	907,910	9.8%
Other income	Rs m	28,820	33,140	15.0%
Total Revenues	Rs m	855,570	941,050	10.0%
Gross profit	Rs m	201,700	217,560	7.9%
Depreciation	Rs m	20,110	28,930	43.9%
Interest	Rs m	0	1,700	0.0%
Profit before tax	Rs m	210,410	220,070	4.6%
Tax	Rs m	56,310	53,680	-4.7%
Profit after tax	Rs m	154,100	166,390	8.0%
Gross profit margin	%	24.4	24.0
Effective tax rate	%	26.8	24.4
Net profit margin	%	18.6	18.3

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

INFOSYS Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 209 billion as compared to Rs 186 billion in FY19, thereby witnessing an increase of 11.9%.
• Current assets rose 3% and stood at Rs 546 billion, while fixed assets rose 20% and stood at Rs 364 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 910 billion as against Rs 834 billion during FY19, thereby witnessing a growth of 9%.

INFOSYS Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	647,210	651,530	0.7
Current Liabilities	Rs m	186,380	208,560	11.9
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	833,660	910,240	9.2
Current assets	Rs m	528,780	545,760	3.2
Fixed Assets	Rs m	304,880	364,480	19.5
Total Assets	Rs m	833,660	910,240	9.2

INFOSYS Cash Flow Statement Analysis

• INFOSYS's cash flow from operating activities (CFO) during FY20 stood at Rs 170 billion, an improvement of 14.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -176 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -9 billion from the Rs -3 billion net cash flows seen during FY19.

INFOSYS Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	148,410	170,030	14.6%
Cash Flow from Investing Activities	Rs m	-5,750	-2,390	-
Cash Flow from Financing Activities	Rs m	-145,120	-175,910	-
Net Cash Flow	Rs m	-3,030	-9,190	-

Current Valuations for INFOSYS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 39.2, an improvement from the EPS of Rs 35.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 640.3, stands at 16.2 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 3.0 times.
• The company's price to cash flow (P/CF) ratio stood at 14.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	190.7	214.1
TTM Earnings per share	Rs	35.5	39.2
Diluted earnings per share	Rs	36.6	39.5
Price to Cash Flow	x	17.9	14.7
TTM P/E ratio	x	20.3	16.2
Price / Book Value ratio	x	6.9	4.4
Market Cap	Rs m	4,482,618	2,880,532
Dividends per share (Unadj.)	Rs	21.5	17.5

Ratio Analysis for INFOSYS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.6x during FY20, from 2.8x during FY19. 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 130.5x during FY20, from 0.0x during FY19. 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 25.5% during FY20, from 23.8% during FY20. 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 34.0% during FY20, from 32.5% during FY19. 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 18.5% during FY20, from 18.5% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	2.8	2.6
Debtors’ Days	Days	7	7
Interest coverage	x	0.0	130.5
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.5	18.5
Return on equity	%	23.8	25.5
Return on capital employed	%	32.5	34.0

To see how INFOSYS has performed over the last 5 years, please visit here.

INFOSYS Share Price Performance

Over the last one year, INFOSYS share price has moved down from Rs 742.3 to Rs 640.3, registering a loss of Rs 102.0 or around 13.7%.

Meanwhile, the S&P BSE IT Index is trading at Rs 12,842.7 (up 3.0%). Over the last one year it has moved down from 15,280.3 to 12,842.7, a loss of 2,438 points (down 16.0%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Read: Latest Annual Report Analysis of INFOSYS