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L&T TECHONOLOGY 2020-21 Annual Report Analysis

Wed, 31 Mar

L&T TECHONOLOGY 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.

L&T TECHONOLOGY Income Statement Analysis

• Operating income during the year fell 3.0% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 12.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 17.7% in FY21 as against 19.7% in FY20.
• Depreciation charges increased by 19.4% and finance costs increased by 24.7% YoY, respectively.
• Other income declined by 8.1% YoY.
• Net profit for the year declined by 19.0% YoY.
• Net profit margins during the year declined from 14.6% in FY20 to 12.2% in FY21.

L&T TECHONOLOGY Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	56,191	54,497	-3.0%
Other income	Rs m	2,112	1,940	-8.1%
Total Revenues	Rs m	58,303	56,437	-3.2%
Gross profit	Rs m	11,084	9,671	-12.7%
Depreciation	Rs m	1,829	2,183	19.4%
Interest	Rs m	365	455	24.7%
Profit before tax	Rs m	11,002	8,973	-18.4%
Tax	Rs m	2,778	2,308	-16.9%
Profit after tax	Rs m	8,224	6,665	-19.0%
Gross profit margin	%	19.7	17.7
Effective tax rate	%	25.2	25.7
Net profit margin	%	14.6	12.2

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L&T TECHONOLOGY Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 11 billion as compared to Rs 10 billion in FY20, thereby witnessing an increase of 5.7%.
• Current assets rose 20% and stood at Rs 35 billion, while fixed assets rose 15% and stood at Rs 16 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 51 billion as against Rs 43 billion during FY20, thereby witnessing a growth of 19%.

L&T TECHONOLOGY Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	27,332	34,434	26.0
Current Liabilities	Rs m	10,388	10,982	5.7
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	42,722	50,662	18.6
Current assets	Rs m	29,102	35,026	20.4
Fixed Assets	Rs m	13,620	15,636	14.8
Total Assets	Rs m	42,722	50,662	18.6

L&T TECHONOLOGY Cash Flow Statement Analysis

• L&T TECHONOLOGY's cash flow from operating activities (CFO) during FY21 stood at Rs 13 billion, an improvement of 108.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -10 billion, an improvement of 352.5% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -4 billion, an improvement of 11% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -408 million from the Rs 99 million net cash flows seen during FY20.

L&T TECHONOLOGY 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	6,381	13,273	108.0%
Cash Flow from Investing Activities	Rs m	-2,222	-10,054	-
Cash Flow from Financing Activities	Rs m	-4,060	-3,627	-
Net Cash Flow	Rs m	99	-408	-

Current Valuations for L&T TECHONOLOGY

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 63.8, an decline from the EPS of Rs 79.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,654.8, stands at 42.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.1 times, while the price to sales ratio stands at 5.1 times.
• The company's price to cash flow (P/CF) ratio stood at 23.2 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	540.2	521.5
TTM Earnings per share	Rs	79.1	63.8
Diluted earnings per share	Rs	77.9	63.2
Price to Cash Flow	x	12.2	23.2
TTM P/E ratio	x	14.9	42.0
Price / Book Value ratio	x	5.4	6.0
Market Cap	Rs m	146,282	205,094
Dividends per share (Unadj.)	Rs	21.0	22.0

Ratio Analysis for L&T TECHONOLOGY

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.2x during FY21, from 2.8x 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 deteriorated and stood at 20.7x during FY21, from 31.1x 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 declined and down at 19.4% during FY21, from 30.1% 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 declined and down at 27.4% during FY21, from 41.6% 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 14.1% during FY21, from 20.1% 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	2.8	3.2
Debtors’ Days	Days	90	83
Interest coverage	x	31.1	20.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	20.1	14.1
Return on equity	%	30.1	19.4
Return on capital employed	%	41.6	27.4

To see how L&T TECHONOLOGY has performed over the last 5 years, please visit here.

L&T TECHONOLOGY Share Price Performance

Over the last one year, L&T TECHONOLOGY share price has moved up from Rs 1,162.4 to Rs 2,654.8, registering a gain of Rs 1,492.4 or around 128.4%.

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 L&T TECHONOLOGY and quarterly results for L&T TECHONOLOGY)

Read: Latest Annual Report Analysis of L&T TECHNOLOGY SERVICES