MASTEK 2022-23 Annual Report Analysis

Wed, 30 Aug

MASTEK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

MASTEK Income Statement Analysis

• Operating income during the year rose 17.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 4.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 18.8% in FY23 as against 21.2% in FY22.
• Depreciation charges increased by 57.1% and finance costs increased by 221.9% YoY, respectively.
• Other income grew by 6.1% YoY.
• Net profit for the year declined by 6.9% YoY.
• Net profit margins during the year declined from 15.3% in FY22 to 12.1% in FY23.

MASTEK Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	21,838	25,634	17.4%
Other income	Rs m	361	383	6.1%
Total Revenues	Rs m	22,199	26,017	17.2%
Gross profit	Rs m	4,625	4,812	4.0%
Depreciation	Rs m	429	674	57.1%
Interest	Rs m	77	247	221.9%
Profit before tax	Rs m	4,480	4,274	-4.6%
Tax	Rs m	1,146	1,171	2.2%
Profit after tax	Rs m	3,334	3,103	-6.9%
Gross profit margin	%	21.2	18.8
Effective tax rate	%	25.6	27.4
Net profit margin	%	15.3	12.1

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MASTEK Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 7 billion as compared to Rs 9 billion in FY22, thereby witnessing an decrease of -13.7%.
• Long-term debt stood at Rs 3 billion as compared to Rs 1 billion during FY22, a growth of 122.7%.
• Current assets fell 18% and stood at Rs 12 billion, while fixed assets rose 99% and stood at Rs 18 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 30 billion as against Rs 24 billion during FY22, thereby witnessing a growth of 26%.

MASTEK Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	10,453	16,682	59.6
Current Liabilities	Rs m	8,520	7,355	-13.7
Long-term Debt	Rs m	1,208	2,690	122.7
Total Liabilities	Rs m	24,177	30,361	25.6
Current assets	Rs m	15,151	12,402	-18.1
Fixed Assets	Rs m	9,025	17,959	99.0
Total Assets	Rs m	24,177	30,361	25.6

MASTEK Cash Flow Statement Analysis

• MASTEK's cash flow from operating activities (CFO) during FY23 stood at Rs 1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -7 billion, an improvement of 3,560.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 926 million, an improvement of 172% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -5 billion from the Rs 1 billion net cash flows seen during FY22.

MASTEK Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	2,735	1,077	-60.6%
Cash Flow from Investing Activities	Rs m	-202	-7,376	-
Cash Flow from Financing Activities	Rs m	-1,285	926	-
Net Cash Flow	Rs m	1,190	-5,189	-

Current Valuations for MASTEK

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 101.7, an decline from the EPS of Rs 111.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,301.4, stands at 23.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.2 times, while the price to sales ratio stands at 2.7 times.
• The company's price to cash flow (P/CF) ratio stood at 19.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	727.5	839.9
TTM Earnings per share	Rs	111.1	101.7
Diluted earnings per share	Rs	108.9	101.4
Price to Cash Flow	x	27.0	19.7
TTM P/E ratio	x	30.5	23.5
Price / Book Value ratio	x	7.0	4.5
Market Cap	Rs m	73,517	74,577
Dividends per share (Unadj.)	Rs	19.0	19.0

Ratio Analysis for MASTEK

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.7x during FY23, from 1.8x during FY22. 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 18.3x during FY23, from 59.3x during FY22. 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 18.6% during FY23, from 31.9% during FY23. 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 23.3% during FY23, from 39.1% during FY22. 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 11.0% during FY23, from 14.1% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.8	1.7
Debtors’ Days	Days	728	721
Interest coverage	x	59.3	18.3
Debt to equity ratio	x	0.1	0.2
Return on assets	%	14.1	11.0
Return on equity	%	31.9	18.6
Return on capital employed	%	39.1	23.3

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 1,898.2 to Rs 2,301.4, registering a gain of Rs 403.2 or around 21.2%.

Meanwhile, the S&P BSE IT Index is trading at Rs 31,511.0 (up 0.8%). Over the last one year it has moved up from 28,914.8 to 31,511.0, a gain of 2,596 points (up 9.0%).

Overall, the S&P BSE SENSEX is up 12.8% over the year.

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