BIRLASOFT 2017-18 Annual Report Analysis

Sat, 31 Mar

BIRLASOFT has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

BIRLASOFT Income Statement Analysis

• Operating income during the year rose 10.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 11.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 10.4% in FY18 as against 10.3% in FY17.
• Depreciation charges increased by 2.0% and finance costs decreased by 23.3% YoY, respectively.
• Other income declined by 16.6% YoY.
• Net profit for the year grew by 9.7% YoY.
• Net profit margins during the year declined from 7.2% in FY17 to 7.1% in FY18.

BIRLASOFT Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	33,167	36,618	10.4%
Other income	Rs m	540	450	-16.6%
Total Revenues	Rs m	33,707	37,069	10.0%
Gross profit	Rs m	3,414	3,811	11.6%
Depreciation	Rs m	827	843	2.0%
Interest	Rs m	136	104	-23.3%
Profit before tax	Rs m	2,991	3,314	10.8%
Tax	Rs m	606	698	15.2%
Profit after tax	Rs m	2,385	2,616	9.7%
Gross profit margin	%	10.3	10.4
Effective tax rate	%	20.3	21.1
Net profit margin	%	7.2	7.1

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BIRLASOFT Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 8 billion as compared to Rs 8 billion in FY17, thereby witnessing an decrease of -1.7%.
• Long-term debt down at Rs 662 million as compared to Rs 985 million during FY17, a fall of 32.8%.
• Current assets rose 13% and stood at Rs 17 billion, while fixed assets rose 2% and stood at Rs 10 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 26 billion as against Rs 24 billion during FY17, thereby witnessing a growth of 8%.

BIRLASOFT Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	15,656	17,969	14.8
Current Liabilities	Rs m	7,746	7,618	-1.7
Long-term Debt	Rs m	985	662	-32.8
Total Liabilities	Rs m	24,321	26,385	8.5
Current assets	Rs m	14,703	16,572	12.7
Fixed Assets	Rs m	9,618	9,813	2.0
Total Assets	Rs m	24,321	26,385	8.5

BIRLASOFT Cash Flow Statement Analysis

• BIRLASOFT's cash flow from operating activities (CFO) during FY18 stood at Rs 4 billion, an improvement of 149.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -2 billion, an improvement of 28.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 862 million from the Rs 930 million net cash flows seen during FY17.

BIRLASOFT Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	1,630	4,074	149.9%
Cash Flow from Investing Activities	Rs m	-1,502	-1,927	-
Cash Flow from Financing Activities	Rs m	801	-1,284	-
Net Cash Flow	Rs m	930	862	-7.3%

Current Valuations for BIRLASOFT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 13.8, an improvement from the EPS of Rs 12.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 216.8, stands at 24.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.4 times, while the price to sales ratio stands at 1.1 times.
• The company's price to cash flow (P/CF) ratio stood at 9.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	176.2	193.2
TTM Earnings per share	Rs	12.7	13.8
Diluted earnings per share	Rs	8.5	9.4
Price to Cash Flow	x	11.3	9.3
TTM P/E ratio	x	15.2	24.1
Price / Book Value ratio	x	1.9	1.8
Market Cap	Rs m	29,913	32,312
Dividends per share (Unadj.)	Rs	2.2	2.4

Ratio Analysis for BIRLASOFT

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.2x during FY18, from 1.9x during FY17. 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 32.8x during FY18, from 23.0x during FY17. 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 14.6% during FY18, from 15.2% during FY18. 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 18.3% during FY18, from 18.8% during FY17. 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 10.3% during FY18, from 10.4% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.9	2.2
Debtors’ Days	Days	86	80
Interest coverage	x	23.0	32.8
Debt to equity ratio	x	0.1	0.0
Return on assets	%	10.4	10.3
Return on equity	%	15.2	14.6
Return on capital employed	%	18.8	18.3

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

BIRLASOFT Share Price Performance

Over the last one year, BIRLASOFT share price has moved up from Rs 129.7 to Rs 216.8, registering a gain of Rs 87.1 or around 67.2%.

Meanwhile, the S&P BSE IT Index is trading at Rs 12,100.6 (down 0.3%). Over the last one year it has moved up from 10,365.5 to 12,100.6, a gain of 1,735 points (up 16.7%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of BIRLASOFT