TECH MAHINDRA 2022-23 Annual Report Analysis

Tue, 27 Jun

TECH MAHINDRA 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.

TECH MAHINDRA Income Statement Analysis

• Operating income during the year fell 4.5% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 40.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 11.2% in FY23 as against 17.9% in FY22.
• Depreciation charges decreased by 46.5% and finance costs increased by 11.2% YoY, respectively.
• Other income declined by 1.2% YoY.
• Net profit for the year declined by 32.9% YoY.
• Net profit margins during the year declined from 12.6% in FY22 to 8.9% in FY23.

TECH MAHINDRA Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	446,460	426,573	-4.5%
Other income	Rs m	11,420	11,283	-1.2%
Total Revenues	Rs m	457,880	437,856	-4.4%
Gross profit	Rs m	79,931	47,695	-40.3%
Depreciation	Rs m	15,204	8,129	-46.5%
Interest	Rs m	1,626	1,808	11.2%
Profit before tax	Rs m	74,521	49,041	-34.2%
Tax	Rs m	18,220	11,266	-38.2%
Profit after tax	Rs m	56,301	37,775	-32.9%
Gross profit margin	%	17.9	11.2
Effective tax rate	%	24.4	23.0
Net profit margin	%	12.6	8.9

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TECH MAHINDRA Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 84 billion as compared to Rs 125 billion in FY22, thereby witnessing an decrease of -33.1%.
• Current assets fell 29% and stood at Rs 173 billion, while fixed assets fell 7% and stood at Rs 183 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 356 billion as against Rs 441 billion during FY22, thereby witnessing a fall of 19%.

TECH MAHINDRA Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	264,769	248,213	-6.3
Current Liabilities	Rs m	125,048	83,651	-33.1
Long-term Debt	Rs m	1,420	0	-100.0
Total Liabilities	Rs m	440,516	355,994	-19.2
Current assets	Rs m	244,557	173,439	-29.1
Fixed Assets	Rs m	195,959	182,555	-6.8
Total Assets	Rs m	440,516	355,994	-19.2

TECH MAHINDRA Cash Flow Statement Analysis

• TECH MAHINDRA's cash flow from operating activities (CFO) during FY23 stood at Rs 41 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 7 billion, an improvement of 40.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -50 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -2 billion from the Rs 11 billion net cash flows seen during FY22.

TECH MAHINDRA 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	52,853	41,021	-22.4%
Cash Flow from Investing Activities	Rs m	4,815	6,768	40.6%
Cash Flow from Financing Activities	Rs m	-46,666	-49,915	-
Net Cash Flow	Rs m	10,985	-1,555	-

Current Valuations for TECH MAHINDRA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 38.8, an decline from the EPS of Rs 64.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,111.7, stands at 22.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.4 times, while the price to sales ratio stands at 2.5 times.
• The company's price to cash flow (P/CF) ratio stood at 26.2 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	508.7	437.9
TTM Earnings per share	Rs	64.2	38.8
Diluted earnings per share	Rs	57.8	38.8
Price to Cash Flow	x	20.4	26.2
TTM P/E ratio	x	26.0	22.2
Price / Book Value ratio	x	4.6	4.8
Market Cap	Rs m	1,217,491	1,201,465
Dividends per share (Unadj.)	Rs	45.0	50.0

Ratio Analysis for TECH MAHINDRA

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.1x during FY23, from 2.0x 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 28.1x during FY23, from 46.8x 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 declined and down at 15.2% during FY23, from 21.3% 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 20.5% during FY23, from 28.6% 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 11.1% during FY23, from 13.1% 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	2.0	2.1
Debtors’ Days	Days	98	89
Interest coverage	x	46.8	28.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	13.1	11.1
Return on equity	%	21.3	15.2
Return on capital employed	%	28.6	20.5

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 1,007.2 to Rs 1,111.7, registering a gain of Rs 104.6 or around 10.4%.

Meanwhile, the S&P BSE IT Index is trading at Rs 28,930.3 (up 0.1%). Over the last one year it has moved up from 28,715.2 to 28,930.3, a gain of 215 points (up 0.7%).

Overall, the S&P BSE SENSEX is up 20.8% over the year.

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