TECH MAHINDRA 2020-21 Annual Report Analysis

Wed, 31 Mar

TECH MAHINDRA 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.

TECH MAHINDRA Income Statement Analysis

• Operating income during the year rose 2.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 23.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 18.0% in FY21 as against 14.9% in FY20.
• Depreciation charges increased by 0.8% and finance costs decreased by 9.3% YoY, respectively.
• Other income declined by 34.0% YoY.
• Net profit for the year grew by 11.5% YoY.
• Net profit margins during the year grew from 10.6% in FY20 to 11.5% in FY21.

TECH MAHINDRA Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	368,677	378,551	2.7%
Other income	Rs m	11,924	7,871	-34.0%
Total Revenues	Rs m	380,601	386,422	1.5%
Gross profit	Rs m	55,086	67,963	23.4%
Depreciation	Rs m	14,458	14,577	0.8%
Interest	Rs m	1,919	1,740	-9.3%
Profit before tax	Rs m	50,633	59,517	17.5%
Tax	Rs m	11,604	15,999	37.9%
Profit after tax	Rs m	39,029	43,518	11.5%
Gross profit margin	%	14.9	18.0
Effective tax rate	%	22.9	26.9
Net profit margin	%	10.6	11.5

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TECH MAHINDRA Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 103 billion as compared to Rs 109 billion in FY20, thereby witnessing an decrease of -5.9%.
• Long-term debt down at Rs 2 billion as compared to Rs 2 billion during FY20, a fall of 7.2%.
• Current assets rose 9% and stood at Rs 253 billion, while fixed assets rose 1% and stood at Rs 135 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 388 billion as against Rs 365 billion during FY20, thereby witnessing a growth of 6%.

TECH MAHINDRA Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	213,867	243,943	14.1
Current Liabilities	Rs m	109,257	102,775	-5.9
Long-term Debt	Rs m	1,787	1,658	-7.2
Total Liabilities	Rs m	365,092	387,647	6.2
Current assets	Rs m	231,723	252,553	9.0
Fixed Assets	Rs m	133,369	135,094	1.3
Total Assets	Rs m	365,092	387,647	6.2

TECH MAHINDRA Cash Flow Statement Analysis

• TECH MAHINDRA's cash flow from operating activities (CFO) during FY21 stood at Rs 81 billion, an improvement of 85.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -55 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -30 billion, an improvement of 33% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -3 billion from the Rs 10 billion net cash flows seen during FY20.

TECH MAHINDRA 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	43,581	80,938	85.7%
Cash Flow from Investing Activities	Rs m	10,286	-54,501	-
Cash Flow from Financing Activities	Rs m	-44,655	-29,869	-
Net Cash Flow	Rs m	9,740	-3,263	-

Current Valuations for TECH MAHINDRA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 49.8, an improvement from the EPS of Rs 44.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 991.3, stands at 22.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.9 times, while the price to sales ratio stands at 2.3 times.
• The company's price to cash flow (P/CF) ratio stood at 11.8 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	423.0	433.1
TTM Earnings per share	Rs	44.8	49.8
Diluted earnings per share	Rs	40.2	44.8
Price to Cash Flow	x	10.3	11.8
TTM P/E ratio	x	14.1	22.1
Price / Book Value ratio	x	2.7	2.8
Market Cap	Rs m	573,609	686,692
Dividends per share (Unadj.)	Rs	15.0	45.0

Ratio Analysis for TECH MAHINDRA

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.5x during FY21, from 2.1x 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 35.2x during FY21, from 27.4x 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 17.8% during FY21, from 18.2% 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 24.9% during FY21, from 24.4% 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 11.7% during FY21, from 11.2% 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	2.1	2.5
Debtors’ Days	Days	75	62
Interest coverage	x	27.4	35.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	11.2	11.7
Return on equity	%	18.2	17.8
Return on capital employed	%	24.4	24.9

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

TECH MAHINDRA Share Price Performance

Over the last one year, TECH MAHINDRA share price has moved up from Rs 565.0 to Rs 991.3, registering a gain of Rs 426.3 or around 75.5%.

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 TECH MAHINDRA and quarterly results for TECH MAHINDRA)

Read: Latest Annual Report Analysis of TECH MAHINDRA