MASTEK 2017-18 Annual Report Analysis

Sat, 31 Mar

MASTEK 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.

MASTEK Income Statement Analysis

• Operating income during the year rose 45.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 120.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 12.2% in FY18 as against 8.1% in FY17.
• Depreciation charges increased by 25.7% and finance costs increased by 55.4% YoY, respectively.
• Other income grew by 66.6% YoY.
• Net profit for the year grew by 115.9% YoY.
• Net profit margins during the year grew from 5.8% in FY17 to 8.6% in FY18.

MASTEK Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	5,602	8,172	45.9%
Other income	Rs m	126	210	66.6%
Total Revenues	Rs m	5,728	8,382	46.3%
Gross profit	Rs m	452	997	120.7%
Depreciation	Rs m	149	188	25.7%
Interest	Rs m	38	59	55.4%
Profit before tax	Rs m	391	960	145.9%
Tax	Rs m	67	261	292.0%
Profit after tax	Rs m	324	700	115.9%
Gross profit margin	%	8.1	12.2
Effective tax rate	%	17.0	27.1
Net profit margin	%	5.8	8.6

MASTEK Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 2 billion as compared to Rs 1 billion in FY17, thereby witnessing an increase of 54.4%.
• Long-term debt down at Rs 496 million as compared to Rs 652 million during FY17, a fall of 23.9%.
• Current assets rose 34% and stood at Rs 4 billion, while fixed assets fell 4% and stood at Rs 4 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 8 billion as against Rs 7 billion during FY17, thereby witnessing a growth of 13%.

MASTEK Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	4,610	5,390	16.9
Current Liabilities	Rs m	1,226	1,893	54.4
Long-term Debt	Rs m	652	496	-23.9
Total Liabilities	Rs m	6,950	7,869	13.2
Current assets	Rs m	3,200	4,284	33.9
Fixed Assets	Rs m	3,750	3,586	-4.4
Total Assets	Rs m	6,950	7,869	13.2

MASTEK Cash Flow Statement Analysis

• MASTEK's cash flow from operating activities (CFO) during FY18 stood at Rs 649 million, an improvement of 51.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -245 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -68 million on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 400 million from the Rs -195 million net cash flows seen during FY17.

MASTEK 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	429	649	51.4%
Cash Flow from Investing Activities	Rs m	-1,190	-245	-
Cash Flow from Financing Activities	Rs m	646	-68	-
Net Cash Flow	Rs m	-195	400	-

Current Valuations for MASTEK

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 29.5, an improvement from the EPS of Rs 13.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 529.3, stands at 22.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.9 times, while the price to sales ratio stands at 1.5 times.
• The company's price to cash flow (P/CF) ratio stood at 10.4 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	239.6	345.0
TTM Earnings per share	Rs	13.9	29.5
Diluted earnings per share	Rs	10.8	23.3
Price to Cash Flow	x	11.5	10.4
TTM P/E ratio	x	14.7	22.7
Price / Book Value ratio	x	0.8	1.7
Market Cap	Rs m	3,681	9,252
Dividends per share (Unadj.)	Rs	3.5	6.0

Ratio Analysis for MASTEK

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.3x during FY18, from 2.6x 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 17.4x during FY18, from 11.4x 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 improved and stood at 13.0% during FY18, from 7.0% 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 improved and stood at 17.3% during FY18, from 8.1% 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 improved and stood at 9.6% during FY18, from 5.2% 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	2.6	2.3
Debtors’ Days	Days	554	777
Interest coverage	x	11.4	17.4
Debt to equity ratio	x	0.1	0.1
Return on assets	%	5.2	9.6
Return on equity	%	7.0	13.0
Return on capital employed	%	8.1	17.3

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

MASTEK Share Price Performance

Over the last one year, MASTEK share price has moved up from Rs 181.2 to Rs 529.3, registering a gain of Rs 348.2 or around 192.2%.

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 MASTEK and quarterly results for MASTEK)

Read: Latest Annual Report Analysis of MASTEK