MEGASOFT 2022-23 Annual Report Analysis

Mon, 26 Feb

MEGASOFT 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.

MEGASOFT Income Statement Analysis

• Operating income during the year fell 96.2% on a year-on-year (YoY) basis.
• The company's operating profit was by NA YoY during the fiscal. Operating profit margins witnessed a growth and stood at 849.9% in FY23 as against 28.4% in FY22.
• Depreciation charges decreased by 21.4% and finance costs increased by 270.0% YoY, respectively.
• Other income grew by 56.8% YoY.
• Net profit for the year grew by 146.1% YoY.
• Net profit margins during the year grew from 8.8% in FY22 to 577.0% in FY23.

MEGASOFT Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	524	20	-96.2%
Other income	Rs m	267	419	56.8%
Total Revenues	Rs m	791	438	-44.6%
Gross profit	Rs m	-149	-168	NA
Depreciation	Rs m	36	28	-21.4%
Interest	Rs m	29	109	270.0%
Profit before tax	Rs m	52	114	117.0%
Tax	Rs m	6	0	-100.0%
Profit after tax	Rs m	46	114	146.1%
Gross profit margin	%	-28.4	-849.9
Effective tax rate	%	11.8	0.0
Net profit margin	%	8.8	577.0

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MEGASOFT Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 232 million as compared to Rs 537 million in FY22, thereby witnessing an decrease of -56.8%.
• Long-term debt stood at Rs 1 billion as compared to Rs 240 million during FY22, a growth of 476.0%.
• Current assets fell 27% and stood at Rs 590 million, while fixed assets rose 55% and stood at Rs 3 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 4 billion as against Rs 3 billion during FY22, thereby witnessing a growth of 32%.

MEGASOFT Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	1,845	1,933	4.8
Current Liabilities	Rs m	537	232	-56.8
Long-term Debt	Rs m	240	1,381	476.0
Total Liabilities	Rs m	2,861	3,768	31.7
Current assets	Rs m	806	590	-26.8
Fixed Assets	Rs m	2,055	3,178	54.6
Total Assets	Rs m	2,861	3,768	31.7

MEGASOFT Cash Flow Statement Analysis

• MEGASOFT's cash flow from operating activities (CFO) during FY23 stood at Rs 127 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -1 billion, an improvement of 1,201.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 852 million, an improvement of 286% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -330 million from the Rs 285 million net cash flows seen during FY22.

MEGASOFT 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	165	127	-23.0%
Cash Flow from Investing Activities	Rs m	-101	-1,308	-
Cash Flow from Financing Activities	Rs m	221	852	286.2%
Net Cash Flow	Rs m	285	-330	-

Current Valuations for MEGASOFT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 1.5, an improvement from the EPS of Rs 0.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 22.1, stands at 14.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.8 times, while the price to sales ratio stands at 82.6 times.
• The company's price to cash flow (P/CF) ratio stood at 20.8 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	7.1	0.3
TTM Earnings per share	Rs	0.6	1.5
Diluted earnings per share	Rs	0.6	1.5
Price to Cash Flow	x	46.0	20.8
TTM P/E ratio	x	82.0	14.3
Price / Book Value ratio	x	1.9	1.5
Market Cap	Rs m	3,572	2,962
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for MEGASOFT

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.5x during FY23, from 1.5x 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 2.0x during FY23, from 2.8x 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 improved and stood at 5.9% during FY23, from 2.5% 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 improved and stood at 6.7% during FY23, from 3.9% 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 improved and stood at 5.9% during FY23, from 2.6% 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	1.5	2.5
Debtors’ Days	Days	1,582	0
Interest coverage	x	2.8	2.0
Debt to equity ratio	x	0.1	0.7
Return on assets	%	2.6	5.9
Return on equity	%	2.5	5.9
Return on capital employed	%	3.9	6.7

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

MEGASOFT Share Price Performance

Over the last one year, MEGASOFT share price has moved down from Rs 51.4 to Rs 22.1, registering a loss of Rs 29.3 or around 57.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 28,479.0 (up 2.5%). Over the last one year it has moved down from 36,402.7 to 28,479.0, a loss of 7,924 points (down 21.8%).

Overall, the S&P BSE SENSEX is up 1.8% over the year.

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