INFOSYS 2020-21 Annual Report Analysis

Wed, 31 Mar

INFOSYS 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.

INFOSYS Income Statement Analysis

• Operating income during the year rose 10.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 26.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 27.4% in FY21 as against 24.0% in FY20.
• Depreciation charges increased by 12.9% and finance costs increased by 14.7% YoY, respectively.
• Other income declined by 23.1% YoY.
• Net profit for the year grew by 16.7% YoY.
• Net profit margins during the year grew from 18.3% in FY20 to 19.3% in FY21.

INFOSYS Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	907,910	1,004,720	10.7%
Other income	Rs m	33,140	25,470	-23.1%
Total Revenues	Rs m	941,050	1,030,190	9.5%
Gross profit	Rs m	217,560	275,430	26.6%
Depreciation	Rs m	28,930	32,670	12.9%
Interest	Rs m	1,700	1,950	14.7%
Profit before tax	Rs m	220,070	266,280	21.0%
Tax	Rs m	53,680	72,050	34.2%
Profit after tax	Rs m	166,390	194,230	16.7%
Gross profit margin	%	24.0	27.4
Effective tax rate	%	24.4	27.1
Net profit margin	%	18.3	19.3

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INFOSYS Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 239 billion as compared to Rs 209 billion in FY20, thereby witnessing an increase of 14.4%.
• Current assets rose 11% and stood at Rs 607 billion, while fixed assets rose 28% and stood at Rs 466 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 1,073 billion as against Rs 910 billion during FY20, thereby witnessing a growth of 18%.

INFOSYS Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	651,530	759,790	16.6
Current Liabilities	Rs m	208,560	238,650	14.4
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	910,240	1,072,880	17.9
Current assets	Rs m	545,760	607,330	11.3
Fixed Assets	Rs m	364,480	465,550	27.7
Total Assets	Rs m	910,240	1,072,880	17.9

INFOSYS Cash Flow Statement Analysis

• INFOSYS's cash flow from operating activities (CFO) during FY21 stood at Rs 232 billion, an improvement of 36.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -75 billion, an improvement of 3,019.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -98 billion, an improvement of 44% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 61 billion from the Rs -9 billion net cash flows seen during FY20.

INFOSYS 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	170,030	232,240	36.6%
Cash Flow from Investing Activities	Rs m	-2,390	-74,560	-
Cash Flow from Financing Activities	Rs m	-175,910	-97,860	-
Net Cash Flow	Rs m	-9,190	60,650	-

Current Valuations for INFOSYS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 45.8, an improvement from the EPS of Rs 39.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,367.8, stands at 29.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.6 times, while the price to sales ratio stands at 5.8 times.
• The company's price to cash flow (P/CF) ratio stood at 18.6 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	214.1	236.7
TTM Earnings per share	Rs	39.2	45.8
Diluted earnings per share	Rs	39.5	46.2
Price to Cash Flow	x	13.8	18.6
TTM P/E ratio	x	16.2	29.6
Price / Book Value ratio	x	4.4	5.6
Market Cap	Rs m	2,880,532	4,220,949
Dividends per share (Unadj.)	Rs	17.5	27.0

Ratio Analysis for INFOSYS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.5x during FY21, from 2.6x 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 137.6x during FY21, from 130.5x 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 improved and stood at 25.6% during FY21, from 25.5% 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 improved and stood at 35.3% during FY21, from 34.0% 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 18.3% during FY21, from 18.5% 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	2.6	2.5
Debtors’ Days	Days	7	7
Interest coverage	x	130.5	137.6
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.5	18.3
Return on equity	%	25.5	25.6
Return on capital employed	%	34.0	35.3

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 up from Rs 640.3 to Rs 1,367.8, registering a gain of Rs 727.5 or around 113.6%.

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 INFOSYS and quarterly results for INFOSYS)

Read: Latest Annual Report Analysis of INFOSYS