XCHANGING SOLUTIONS 2020-21 Annual Report Analysis

Wed, 31 Mar

XCHANGING SOLUTIONS 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.

XCHANGING SOLUTIONS Income Statement Analysis

• Operating income during the year rose 7.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 14.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 28.3% in FY21 as against 26.4% in FY20.
• Depreciation charges decreased by 4.2% and finance costs increased by 100.0% YoY, respectively.
• Other income grew by 25.6% YoY.
• Net profit for the year grew by 14.1% YoY.
• Net profit margins during the year grew from 30.0% in FY20 to 31.9% in FY21.

XCHANGING SOLUTIONS Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	1,823	1,957	7.4%
Other income	Rs m	127	159	25.6%
Total Revenues	Rs m	1,949	2,117	8.6%
Gross profit	Rs m	482	554	14.9%
Depreciation	Rs m	14	14	-4.2%
Interest	Rs m	1	3	100.0%
Profit before tax	Rs m	593	697	17.5%
Tax	Rs m	46	72	57.5%
Profit after tax	Rs m	547	624	14.1%
Gross profit margin	%	26.4	28.3
Effective tax rate	%	7.7	10.4
Net profit margin	%	30.0	31.9

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XCHANGING SOLUTIONS Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 1 billion as compared to Rs 1 billion in FY20, thereby witnessing an decrease of -2.8%.
• Current assets rose 9% and stood at Rs 5 billion, while fixed assets rose 11% and stood at Rs 2 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 7 billion as against Rs 6 billion during FY20, thereby witnessing a growth of 9%.

XCHANGING SOLUTIONS Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	4,961	5,557	12.0
Current Liabilities	Rs m	1,186	1,153	-2.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	6,158	6,723	9.2
Current assets	Rs m	4,352	4,727	8.6
Fixed Assets	Rs m	1,806	1,996	10.5
Total Assets	Rs m	6,158	6,723	9.2

XCHANGING SOLUTIONS Cash Flow Statement Analysis

• XCHANGING SOLUTIONS's cash flow from operating activities (CFO) during FY21 stood at Rs 620 million, an improvement of 35.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs 77 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -18 million on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 653 million from the Rs 690 million net cash flows seen during FY20.

XCHANGING SOLUTIONS 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	457	620	35.5%
Cash Flow from Investing Activities	Rs m	137	77	-43.8%
Cash Flow from Financing Activities	Rs m	-12	-18	-
Net Cash Flow	Rs m	690	653	-5.4%

Current Valuations for XCHANGING SOLUTIONS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 5.6, an improvement from the EPS of Rs 4.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 64.7, stands at 11.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 3.7 times.
• The company's price to cash flow (P/CF) ratio stood at 11.3 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	16.4	17.6
TTM Earnings per share	Rs	4.9	5.6
Diluted earnings per share	Rs	4.9	5.6
Price to Cash Flow	x	6.3	11.3
TTM P/E ratio	x	9.9	11.5
Price / Book Value ratio	x	1.0	1.3
Market Cap	Rs m	5,013	7,208
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for XCHANGING SOLUTIONS

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 4.1x during FY21, from 3.7x 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 deteriorated and stood at 269.0x during FY21, from 457.1x 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 11.2% during FY21, from 11.0% 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 12.6% during FY21, from 12.0% 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 9.3% during FY21, from 8.9% 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	3.7	4.1
Debtors’ Days	Days	415	174
Interest coverage	x	457.1	269.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.9	9.3
Return on equity	%	11.0	11.2
Return on capital employed	%	12.0	12.6

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

XCHANGING SOLUTIONS Share Price Performance

Over the last one year, XCHANGING SOLUTIONS share price has moved up from Rs 31.6 to Rs 64.7, registering a gain of Rs 33.1 or around 104.7%.

Overall, the S&P BSE SENSEX is up 74.1% over the year.

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

Read: Latest Annual Report Analysis of XCHANGING SOLUTIONS