MASTEK 2020-21 Annual Report Analysis

Wed, 31 Mar

MASTEK 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.

MASTEK Income Statement Analysis

• Operating income during the year rose 60.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 175.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 21.0% in FY21 as against 12.3% in FY20.
• Depreciation charges increased by 80.6% and finance costs increased by 123.8% YoY, respectively.
• Other income declined by 24.1% YoY.
• Net profit for the year grew by 121.2% YoY.
• Net profit margins during the year grew from 10.6% in FY20 to 14.6% in FY21.

MASTEK Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	10,715	17,219	60.7%
Other income	Rs m	413	314	-24.1%
Total Revenues	Rs m	11,128	17,532	57.6%
Gross profit	Rs m	1,313	3,610	175.0%
Depreciation	Rs m	249	450	80.6%
Interest	Rs m	36	81	123.8%
Profit before tax	Rs m	1,441	3,393	135.5%
Tax	Rs m	303	876	189.3%
Profit after tax	Rs m	1,138	2,518	121.2%
Gross profit margin	%	12.3	21.0
Effective tax rate	%	21.0	25.8
Net profit margin	%	10.6	14.6

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MASTEK Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 7 billion as compared to Rs 5 billion in FY20, thereby witnessing an increase of 53.1%.
• Long-term debt down at Rs 2 billion as compared to Rs 2 billion during FY20, a fall of 21.0%.
• Current assets rose 59% and stood at Rs 14 billion, while fixed assets fell 13% and stood at Rs 9 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 22 billion as against Rs 19 billion during FY20, thereby witnessing a growth of 20%.

MASTEK Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	7,696	8,321	8.1
Current Liabilities	Rs m	4,780	7,318	53.1
Long-term Debt	Rs m	2,409	1,902	-21.0
Total Liabilities	Rs m	18,646	22,426	20.3
Current assets	Rs m	8,645	13,703	58.5
Fixed Assets	Rs m	10,001	8,723	-12.8
Total Assets	Rs m	18,646	22,426	20.3

MASTEK Cash Flow Statement Analysis

• MASTEK's cash flow from operating activities (CFO) during FY21 stood at Rs 3 billion, an improvement of 55.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs 2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 4 billion from the Rs 1 billion net cash flows seen during FY20.

MASTEK 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	1,845	2,872	55.7%
Cash Flow from Investing Activities	Rs m	-2,687	1,813	-
Cash Flow from Financing Activities	Rs m	2,050	-1,177	-
Net Cash Flow	Rs m	1,274	3,706	190.9%

Current Valuations for MASTEK

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 99.8, an improvement from the EPS of Rs 46.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,220.3, stands at 14.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.4 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 7.0 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	441.1	682.5
TTM Earnings per share	Rs	46.9	99.8
Diluted earnings per share	Rs	37.9	83.9
Price to Cash Flow	x	4.1	7.0
TTM P/E ratio	x	5.0	14.5
Price / Book Value ratio	x	1.1	2.5
Market Cap	Rs m	8,241	20,628
Dividends per share (Unadj.)	Rs	8.0	14.5

Ratio Analysis for MASTEK

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.9x during FY21, from 1.8x 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 improved and stood at 42.9x during FY21, from 40.8x 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 30.3% during FY21, from 14.8% 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 34.0% during FY21, from 14.6% 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 improved and stood at 11.6% during FY21, from 6.3% 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	1.8	1.9
Debtors’ Days	Days	1,076	795
Interest coverage	x	40.8	42.9
Debt to equity ratio	x	0.3	0.2
Return on assets	%	6.3	11.6
Return on equity	%	14.8	30.3
Return on capital employed	%	14.6	34.0

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 189.1 to Rs 1,220.3, registering a gain of Rs 1,031.2 or around 545.3%.

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 MASTEK and quarterly results for MASTEK)

Read: Latest Annual Report Analysis of MASTEK