COFORGE 2020-21 Annual Report Analysis

Wed, 31 Mar

COFORGE 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.

COFORGE Income Statement Analysis

• Operating income during the year rose 11.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 6.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 16.3% in FY21 as against 17.1% in FY20.
• Depreciation charges increased by 6.1% and finance costs decreased by 7.7% YoY, respectively.
• Other income declined by 51.8% YoY.
• Net profit for the year declined by 0.3% YoY.
• Net profit margins during the year declined from 11.2% in FY20 to 10.0% in FY21.

COFORGE Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	41,839	46,628	11.4%
Other income	Rs m	677	326	-51.8%
Total Revenues	Rs m	42,516	46,954	10.4%
Gross profit	Rs m	7,162	7,615	6.3%
Depreciation	Rs m	1,730	1,836	6.1%
Interest	Rs m	155	143	-7.7%
Profit before tax	Rs m	5,954	5,962	0.1%
Tax	Rs m	1,278	1,302	1.9%
Profit after tax	Rs m	4,676	4,660	-0.3%
Gross profit margin	%	17.1	16.3
Effective tax rate	%	21.5	21.8
Net profit margin	%	11.2	10.0

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COFORGE Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 17 billion as compared to Rs 15 billion in FY20, thereby witnessing an increase of 11.9%.
• Long-term debt down at Rs 5 million as compared to Rs 48 million during FY20, a fall of 89.6%.
• Current assets rose 4% and stood at Rs 30 billion, while fixed assets rose 6% and stood at Rs 12 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 42 billion as against Rs 40 billion during FY20, thereby witnessing a growth of 4%.

COFORGE Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	23,882	24,138	1.1
Current Liabilities	Rs m	15,252	17,061	11.9
Long-term Debt	Rs m	48	5	-89.6
Total Liabilities	Rs m	40,406	42,222	4.5
Current assets	Rs m	28,820	29,931	3.9
Fixed Assets	Rs m	11,586	12,291	6.1
Total Assets	Rs m	40,406	42,222	4.5

COFORGE Cash Flow Statement Analysis

• COFORGE's cash flow from operating activities (CFO) during FY21 stood at Rs 8 billion, an improvement of 156.8% 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 -6 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -196 million from the Rs 3 billion net cash flows seen during FY20.

COFORGE 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	2,969	7,623	156.8%
Cash Flow from Investing Activities	Rs m	1,123	-2,354	-
Cash Flow from Financing Activities	Rs m	-1,327	-5,531	-
Net Cash Flow	Rs m	3,001	-196	-

Current Valuations for COFORGE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 76.9, an improvement from the EPS of Rs 74.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,929.3, stands at 38.3 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 7.4 times, while the price to sales ratio stands at 3.8 times.
• The company's price to cash flow (P/CF) ratio stood at 18.9 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	669.5	769.6
TTM Earnings per share	Rs	74.8	76.9
Diluted earnings per share	Rs	76.8	76.5
Price to Cash Flow	x	10.9	18.9
TTM P/E ratio	x	15.0	38.3
Price / Book Value ratio	x	3.7	5.1
Market Cap	Rs m	87,369	122,592
Dividends per share (Unadj.)	Rs	31.0	13.0

Ratio Analysis for COFORGE

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.8x during FY21, from 1.9x 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 42.7x during FY21, from 39.4x 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 19.3% during FY21, from 19.6% 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 25.3% during FY21, from 25.5% 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 11.4% during FY21, from 12.0% 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	1.9	1.8
Debtors’ Days	Days	75	70
Interest coverage	x	39.4	42.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	12.0	11.4
Return on equity	%	19.6	19.3
Return on capital employed	%	25.5	25.3

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

COFORGE Share Price Performance

Over the last one year, COFORGE share price has moved up from Rs 1,148.2 to Rs 2,929.3, registering a gain of Rs 1,781.2 or around 155.1%.

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 COFORGE and quarterly results for COFORGE)

Read: Latest Annual Report Analysis of COFORGE