FINANCIAL ANALYSIS

HCL TECHNOLOGIES LTD

BY:RAVIPAL SINGH (44)

KNOW THE COMPANY
• INDUSTRY • FOUNDED • HEADQUATERS • CHAIRMAN • CEO IT SERVICES 1976 NOIDA, INDIA SHIV NADAR VINEET NAYAR

• REVENUE (in 2010) • EMPLOYEES

US $2.6 BILLION
72000

SERVICES OFFERED
• Engineering and R&D quality Services(ERS)

• Enterprise Transformation Services(ETS)
• Business Processing Outsourcing(BPO) • Custom Application Services • Enterprise Application Services(EAS) • IT Infrastructure Management

INDUSTRIES SERVED • • • • • • • • • FINANCIAL SERVICES EDUCATION TELECOM RETAIL TRAVEL MANUFACTURING MEDIA & ENTERTAINMENT TRANSPORTATION & LOGISTICS ENERGY & UTILITIES .

WHY ANALYZE? The goal of Financial Analysis is to provide Economic Decision makers with useful information. .

RATIO ANALYSIS Calculations between different sets of data on the Annual report to determine the short-term Financial health and longterm Financial health of the firm. .

LIQUIDITY RATIOS A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. the larger the margin of safety that the company possesses to cover short-term debts. the higher the value of the ratio. Generally. .

• CASH RATIO . the better the position of the company. and how quickly. The higher the quick ratio. the company can repay its short-term debt .TYPES OF LIQUIDITY RATIOS • CURRENT RATIO – The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months • QUICK/ACID RATIO -The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It can therefore determine if.The ratio of a company's total cash and cash equivalents to its current liabilities.

59 .41 2008 1.81 2006 .99 2007 1.CURRENT RATIO YEAR CURRENT RATIO 2005 .12 2009 1.

QUICK / ACID RATIO YEAR QUICK RATIO 2005 0.8 2006 0.71 .06 2009 1.98 2007 1.39 2008 1.

09 2007 0.52 .12 2006 0.27 2008 0.26 2009 0.CASH RATIO YEAR CASH RATIO 2005 0.

Leverage ratios measure the extent to which the firm is using long term debt .LEVERAGE RATIOS Leverage ratios provide an indication of the long term solvency of the firm. .

The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period .TYPES OF LEVERAGE RATIOS • DEBT EQUITY RATIO:-A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets • LONG TERM DEBT EQUITY RATIO:. .is another leverage ratio that compares a company's long term liabilities to its total shareholders equity • INTERSEST COVERAGE RATIO:-A ratio used to determine how easily a company can pay interest on outstanding debt.

01 2008 0.15 .03 2006 0.01 2009 0.01 2007 0.DEBT EQUITY RATIO YEAR CASH RATIO 2005 0.

03 2006 0.01 2007 0.01 2008 0.04 .01 2009 0.LONG TERM DEBT EQUITY RATIO YEAR RATIO 2005 0.

INTEREST COVERAGE RATIO YEAR RATIO 2005 61.07 2009 51.16 2007 68.43 2006 62.14 .58 2008 62.

. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period.TURNOVER RATIOS A measure of the number of times a company's inventory is replaced during a given time period. A high turnover ratio is a sign that the company is producing and selling its goods or services very quickly.

This provides some useful information as to how effectively a company is using its working capital to generate sales • DEBTORS TURNOVER RATIO:-in simple words its the average time which debtors take to pay . • SHORT TERM ASSETS TURNOVER RATIO: represents the amount of revenue generated by a company as a result of its short term assets on hand.TURNOVER RATIOS • TOTAL ASSESTS TURNOVER RATIO:-The total asset turnover represents the amount of revenue generated by a company as a result of its assets on hand. • WORKING CAPITAL TURNOVER RATIO:-A measurement comparing the depletion of working capital to the generation of sales over a given period. .

51 2009 1.TOTAL ASSET TURNOVER RATIO YEAR RATIO 2005 0.13 2008 1.25 .5 2006 1.22 2007 1.

31 2007 3.SHORT TERM ASSET RATIO YEAR RATIO 2005 2.73 .13 2008 3.53 2006 3.27 2009 2.

28 2009 166.77 2007 56.75 2008 23.WORKING CAPITALTURNOVER RATIO YEAR RATIO 2005 -31.86 2006 -0.69 .

DEBTORS TURNOVER RATIO YEAR RATIO 2005 6.79 .09 2006 6.37 2007 5.45 2009 3.55 2008 5.

PROFITABILITY RATIOS A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. . For most of these ratios. having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

• GROSS PROFIT MARGIN RATIO:. It is calculated as profit before interest and taxes divided by tangible capital employed. • RETURN ON TOTAL ASSETS RATIO:. or cost of goods sold • OPERATING PROFIT MARGIN RATIO:-Operating profit margin indicates how effective a company is at controlling the costs and expenses associated with their normal business operations.The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid.TYPES OF PROFITABILITY RATIOS • RETURN ON CAPITAL EMPLOYED RATIO:.is a measure of the returns a company derives from its capital.The gross profit margin ratio tells us the profit a business makes on its cost of sales. .

39 .15 2007 22.63 2006 26.08 2009 32.RETURN ON CAPITAL EMPLOYED RATIO YEAR ROCE(%) 2005 10.35 2008 33.

64 2007 51.RETURN ON TOTAL ASSETS RATIO YEAR ROTA(%) 2005 89.61 2008 48.22 2009 52.59 2006 79.04 .

33 .86 2009 24.97 2006 22.12 2007 24.88 2008 21.GROSS PROFIT MARGIN RATIO YEAR GPM(%) 2005 19.

58 2009 29.63 2006 26.OPERATING PROFIT MARGIN RATIO YEAR OPM(%) 2005 24.72 .86 2008 26.69 2007 24.

63 .11 2008 16.68 2009 20.36 2006 21 2007 29.NET PROFIT MARGIN RATIO YEAR NPM(%) 2005 22.

.MARKET VALUATION RATIOS Market Value Ratios relate an observable market value. the stock price. to book values obtained from the firm's financial statements.

TYPES OF MARKET VALUATION RATIOS • EARNING PER SHARE RATIO:.-share earnings. • DIVIDENT PAYOUT RATIO:-The percentage of earnings paid to shareholders in dividends . • PRICE EARNING RATIO:-A valuation ratio of a company's current share price compared to its per share earnings. High P/E suggests that investors are expecting higher earnings growth in the future to a lower P/E. Dividend per share (DPS) is the total dividends paid out over an entire year divided by the number of outstanding ordinary shares issued.It tells how much profit was generated on a per share basis. • DIVIDENT PER SHARE RATIO:-.

88 .6 2008 11.EARNING PER SHARE RATIO YEAR EPS 2005 10.72 2009 14.74 2007 16.31 2006 19.

50 2008 26.14 2007 27.PRICE EARNING RATIO YEAR P/E 2005 18.29 2006 25.08 2009 29.43 .

DIVIDEND PER SHARE RATIO YEAR DPS 2005 16 2006 16 2007 8 2008 9 2009 7 .

77 2009 0.81 2007 0.47 .55 2006 0.DIVIDENT PAYOUT RATIO YEAR DPOR 2005 1.48 2008 0.

. • As HCLT is looking good in its IT business and it also looked strong in recession so it is advisable to invest in HCLT to get good returns and safety in investments. So it will be a wise decision to invest in HCLT.RECOMMENDATION • After examining the annual reports of HCLT of previous five years. we can say that HCLT has grown year by year and has improved it business. Even qualitative analysis suggests that HCLT has bagged several new projects viz in New Zealand and in Europe and also bagged some domestic projects and they are planning to expand their business.

THANK YOU .

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