8/8/2019 FA Project Report on HCLT Ltd
1/34
8/8/2019 FA Project Report on HCLT Ltd
2/34
Project Report on financial analysis of HCLT ltd.
2
INTRODUCTION TO IT SECTOR
Information technology (IT) is "the study, design, development, implementation, support or
management of computer-based information systems, particularly software applications andcomputer hardware", according to the Information Technology Association of America
(ITAA).[1] IT deals with the use of electronic computers and computer software to securely
convert, store, protect, process, transmit, input, output, and retrieve information.
As it pertains to technology, IT spans a wide variety of areas that include but are not limited to
things such as Processes, Computer Software, Computer Hardware, Programming Languages,
and Data Constructs. In short, anything that renders Data, Information or perceived Knowledge,
in any visual format whatsoever, via any multimedia distribution mechanism, is considered to be
a part of the domain space known as Information Technology (IT).
As it pertains to organizations within enterprises, IT represents an operational group that helps
solve such problems as those related to data, information and knowledge capture, persistence,
processing, brokering, discovery and rendering. Such organizations can be as small as one or two
people that can be shared between multiple small business and as large as multi-billion dollar
structures that are common in all Fortune 500 enterprises.
Today, the term information has ballooned to encompass many aspects of computing and
technology, and the term has become very recognizable. IT professionals perform a variety of
functions (IT Disciplines/Competencies) that range from installing applications to designing
complex computer networks and information databases. A few of the duties that IT professionals
perform may include data management, networking, engineering computer hardware, database
and software design, as well as management and administration of entire systems. Information
technology is starting to spread farther than the conventional personal computer and network
technology, and more into integrations of other technologies such as the use of cell phones,
televisions, automobiles, and more, which is increasing the demand for such jobs.
In the recent past, ABET and the ACM have collaborated to form accreditation and curriculum
standards[2] for degrees in Information Technology as a distinct field of study separate from
http://en.wikipedia.org/wiki/Information_systemhttp://en.wikipedia.org/wiki/Information_Technology_Association_of_Americahttp://en.wikipedia.org/wiki/Information_technology#cite_note-0http://en.wikipedia.org/wiki/Computershttp://en.wikipedia.org/wiki/Computer_softwarehttp://en.wikipedia.org/wiki/Classified_informationhttp://en.wikipedia.org/wiki/Data_conversionhttp://en.wikipedia.org/wiki/Computer_data_storagehttp://en.wikipedia.org/wiki/Data_securityhttp://en.wikipedia.org/wiki/Data_processinghttp://en.wikipedia.org/wiki/Data_transmissionhttp://en.wikipedia.org/wiki/Inputhttp://en.wikipedia.org/wiki/Outputhttp://en.wikipedia.org/wiki/Information_retrievalhttp://en.wikipedia.org/wiki/Informationhttp://en.wikipedia.org/wiki/Programming_Languageshttp://en.wikipedia.org/wiki/Fortune_500http://en.wikipedia.org/wiki/Application_softwarehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Databasehttp://en.wikipedia.org/wiki/Data_managementhttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Personal_computerhttp://en.wikipedia.org/wiki/ABEThttp://en.wikipedia.org/wiki/Association_for_Computing_Machineryhttp://en.wikipedia.org/wiki/Information_technology#cite_note-1http://en.wikipedia.org/wiki/Information_technology#cite_note-1http://en.wikipedia.org/wiki/Association_for_Computing_Machineryhttp://en.wikipedia.org/wiki/ABEThttp://en.wikipedia.org/wiki/Personal_computerhttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Data_managementhttp://en.wikipedia.org/wiki/Databasehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Application_softwarehttp://en.wikipedia.org/wiki/Fortune_500http://en.wikipedia.org/wiki/Programming_Languageshttp://en.wikipedia.org/wiki/Informationhttp://en.wikipedia.org/wiki/Information_retrievalhttp://en.wikipedia.org/wiki/Outputhttp://en.wikipedia.org/wiki/Inputhttp://en.wikipedia.org/wiki/Data_transmissionhttp://en.wikipedia.org/wiki/Data_processinghttp://en.wikipedia.org/wiki/Data_securityhttp://en.wikipedia.org/wiki/Computer_data_storagehttp://en.wikipedia.org/wiki/Data_conversionhttp://en.wikipedia.org/wiki/Classified_informationhttp://en.wikipedia.org/wiki/Computer_softwarehttp://en.wikipedia.org/wiki/Computershttp://en.wikipedia.org/wiki/Information_technology#cite_note-0http://en.wikipedia.org/wiki/Information_Technology_Association_of_Americahttp://en.wikipedia.org/wiki/Information_systemhttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
3/34
Project Report on financial analysis of HCLT ltd.
3
both Computer Science and Information Systems. SIGITE [3] is the ACM working group for
defining these standards. The Worldwide IT services revenue totaled $763 billion in 2009.[4]
It is important to consider the overall value chain in technology development projects as the
challenge for the value creation is increasing with the growing competitiveness between
organizations that has become evident. The concept of value creation through technology is
heavily dependent upon the alignment of technology and business strategies. While the value
creation for an organization is a network of relationships between internal and external
environments, technology plays an important role in improving the overall value chain of an
organization. However, this increase requires business and technology management to work as a
creative, synergistic, and collaborative team instead of a purely mechanistic span of control.
Technology can help an organization improve its competitive advantage within the industry inwhich it resides and generate superior performance at a greater value, according to Bird[5].
http://en.wikipedia.org/wiki/Computer_Sciencehttp://en.wikipedia.org/wiki/Information_Systemshttp://en.wikipedia.org/wiki/Information_technology#cite_note-2http://en.wikipedia.org/wiki/Information_technology#cite_note-gartner.com-3http://en.wikipedia.org/wiki/Information_technology#cite_note-4http://en.wikipedia.org/wiki/Information_technology#cite_note-4http://en.wikipedia.org/wiki/Information_technology#cite_note-gartner.com-3http://en.wikipedia.org/wiki/Information_technology#cite_note-2http://en.wikipedia.org/wiki/Information_Systemshttp://en.wikipedia.org/wiki/Computer_Sciencehttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
4/34
Project Report on financial analysis of HCLT ltd.
4
HCL TECHNOLOGIES LTD.
Type Public
BSE: 532281NSE: HCLTECH
Industry IT Services
Founded 1976
Headquarters Noida, UP, India
Key people
Shiv Nadar - Founder, Chairman, CSOVineet Nayar - CEO
Anant Gupta - President, Infrastructure Services DivisionRahul Singh - President, BPO Business Services
Revenue US$ 2.6 billion (2010)
Employees 72,000 (2010)
Website www.hcltech.com
HCL Technologies (HCLT)[6] is a global IT Services company headquartered in Noida, India
and led by its CEO Vineet Nayar. It is the IT services arm ofHCLT, a US$5 billion global
Technology and IT Enterprise. HCL Technologies, along with its subsidiaries, had
consolidated revenues of US$2.6 billion, as on 31st March 2010, and employed more than
70,000 people.
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=532281http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/equities/cmquote_tab.jsp?key=HCLTECHEQN&symbol=HCLTECH&flag=0http://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/New_Okhla_Industrial_Development_Authorityhttp://en.wikipedia.org/wiki/Uttar_Pradeshhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Shiv_Nadarhttp://en.wikipedia.org/wiki/Chief_Strategy_Officerhttp://en.wikipedia.org/wiki/Vineet_Nayarhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/Websitehttp://www.hcltech.com/http://en.wikipedia.org/wiki/IT_Serviceshttp://en.wikipedia.org/wiki/Noidahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Vineet_Nayarhttp://en.wikipedia.org/wiki/HCL_Enterprisehttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svghttp://en.wikipedia.org/wiki/HCL_Enterprisehttp://en.wikipedia.org/wiki/Vineet_Nayarhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Noidahttp://en.wikipedia.org/wiki/IT_Serviceshttp://www.hcltech.com/http://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Vineet_Nayarhttp://en.wikipedia.org/wiki/Chief_Strategy_Officerhttp://en.wikipedia.org/wiki/Shiv_Nadarhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Uttar_Pradeshhttp://en.wikipedia.org/wiki/New_Okhla_Industrial_Development_Authorityhttp://en.wikipedia.org/wiki/Industryhttp://www.nseindia.com/marketinfo/equities/cmquote_tab.jsp?key=HCLTECHEQN&symbol=HCLTECH&flag=0http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=532281http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
5/34
Project Report on financial analysis of HCLT ltd.
5
SERVICES
HCL's main service offerings are along the following business lines:
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
HCL serves a broad range of industries including Financial Services, Education, Hi-tech &
Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences, Healthcare,
Media & Entertainment, Travel, Transportation & Logistics, Automotive, Government, and
Energy & Utilities.
ACQUISITION AND JOINT VENTURES
The company acquired Capitalstream, a US BFSI product company for US$40 million in
February 2008. Capitalstream's Finance Center product is an addition to HCL's current product
addressing the BFSI market - Penstock, the product that HCL launched in 2007.
On 15 December 2008, HCLT acquired the UK based AXON Group for US$658 million, which
was renamed HCL AXON after the acquisition. It was the largest acquisition ever in the history
of the Indian IT industry, surpassing Wipros $600 million acquisition of Infocrossing in 2007.
http://en.wikipedia.org/wiki/BFSIhttp://en.wikipedia.org/wiki/Axon_Grouphttp://en.wikipedia.org/wiki/HCL_Axonhttp://en.wikipedia.org/wiki/HCL_Axonhttp://en.wikipedia.org/wiki/Axon_Grouphttp://en.wikipedia.org/wiki/BFSIhttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
6/34
8/8/2019 FA Project Report on HCLT Ltd
7/34
Project Report on financial analysis of HCLT ltd.
7
RATIO ANALYSIS
Companies use calculations between different sets of data on the annual report to
determine the short-term financial health and long-term financial health of the firm. Ratios also
provide the changes in a company caused by internal and external factors often not displayed in
individual financial statement information, such as the cost of goods sold. A ratio is a simple
mathematical expression of the relationship of one item to another.
Different ratios provide different information to different financial information users,
including the company.
ADVANTAGES OF RATIO ANALYSIS
Financial ratios are essentially concerned with the identification of significant accounting data
relationships, which give the decision-maker insights into the financial performance of a
company. The advantages of ratio analysis can be summarized as follows:
Ratios facilitate conducting trend analysis, which is important for decision making and
forecasting.
Ratio analysis helps in the assessment of the liquidity, operating efficiency, profitability
and solvency of a firm.
Ratio analysis provides a basis for both intra-firm as well as inter-firm comparisons.
The comparison of actual ratios with base year ratios or standard ratios helps the
management analyze the financial performance of the firm.
LIMITATIONS OF RATIO ANALYSIS
Ratio analysis has its limitations. These limitations are described below:
A ratio in isolation is of little help. It should be compared with the base year ratio or
standard ratio, the computation of which is difficult as it involves the selection of a base
year and the determination of standards.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
8/34
Project Report on financial analysis of HCLT ltd.
8
Inter-firm comparison may not be useful unless the firms compared are of the same size
and age, and employ similar production methods and accounting practices.
Even within a company, comparisons can be distorted by changes in the price level.
Ratios provide only quantitative information, not qualitative information.
Ratios are calculated on the basis of past financial statements. They do not indicate future
trends and they do not consider economic conditions.
CONCLUSION
Ratio analysis has a major significance in analyzing the financial performance of a company over
a period of time. Decisions affecting product prices, per unit costs, volume or efficiency have an
impact on the profit margin or turnover ratios of a company. Similarly, decisions affecting the
amount and ratio of debt or equity used have an effect on the financial structure and overall cost
of capital of a company. Understanding the inter-relationships among the various ratios, such as
turnover ratios and leverage and profitability ratios, helps managers invest in areas where the risk
adjusted return is maximum. In spite of its limitations, ratio analysis can provide useful and
reliable information if relevant data is used for analysis.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
9/34
Project Report on financial analysis of HCLT ltd.
9
BALANCE SHEET OF HCLTHCL Technologies
Balance Sheet ------------------- in Rs` Cr. -------------------Jun '05 Jun '06 Jun '07 Jun '08 Jun '09
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 63.84 64.69 132.74 133.27 134.05
Equity Share Capital 63.84 64.69 132.74 133.27 134.05
Share Application Money 1.64 1.33 0.00 1.71 0.47
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 2,796.14 2,511.18 3,292.28 3,079.85 3,353.72
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net worth 2,861.62 2,577.20 3,425.02 3,214.83 3,488.24
Secured Loans 96.42 13.17 40.77 25.24 123.81
Unsecured Loans 0.27 0.21 0.12 0.09 389.92
Total Debt 96.69 13.38 40.89 25.33 513.73
Total Liabilities 2,958.31 2,590.58 3,465.91 3,240.16 4,001.97
Jun '05 Jun '06 Jun '07 Jun '08 Jun '09
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 632.06 1,014.08 1,332.67 1,599.61 1,957.86
Less: Accum. Depreciation 272.11 488.40 662.58 874.32 1,100.88
Net Block 359.95 525.68 670.09 725.29 856.98
Capital Work in Progress 71.78 163.63 212.86 419.03 417.56
Investments 2,654.66 1,907.76 1,988.86 1,797.34 562.75
Inventories 0.00 0.00 0.00 0.00 87.01
Sundry Debtors 306.41 645.98 712.48 980.02 1,489.26
Cash and Bank Balance 81.14 104.51 105.93 162.87 144.00
Total Current Assets 387.55 750.49 818.41 1,142.89 1,720.27
Loans and Advances 166.02 376.41 934.44 1,183.99 1,817.97
Fixed Deposits 3.39 1.71 275.01 524.01 1,221.83
Total CA, Loans & Advances 556.96 1,128.61 2,027.86 2,850.89 4,760.07
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
10/34
Project Report on financial analysis of HCLT ltd.
10
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 511.11 935.02 1,003.02 1,828.85 2,217.44
Provisions 173.93 200.08 430.74 723.54 377.95
Total CL & Provisions 685.04 1,135.10 1,433.76 2,552.39 2,595.39
Net Current Assets -128.08 -6.49 594.10 298.50 2,164.68
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 2,958.31 2,590.58 3,465.91 3,240.16 4,001.97
Contingent Liabilities 511.56 331.01 418.65 469.36 3,317.46
Book Value (Rs) 89.59 79.64 51.61 48.22 52.04
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
11/34
8/8/2019 FA Project Report on HCLT Ltd
12/34
Project Report on financial analysis of HCLT ltd.
12
Tax 12.15 15.45 75.87 94.60 196.61
Reported Net Profit 329.27 638.38 1,101.82 780.65 997.31
Total Value Addition 1,090.48 2,223.16 2,831.54 3,388.43 3,285.42
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 501.75 516.10 525.59 598.58 469.61
Corporate Dividend Tax 68.17 72.38 81.60 101.72 79.73
Per share data (annualized)
Shares in issue (lakhs) 3,192.15 3,234.42 6,636.83 6,663.40 6,702.57
Earnings Per Share (Rs) 10.31 19.74 16.60 11.72 14.88
Equity Dividend (%) 800.00 800.00 400.00 450.00 350.00
Book Value (Rs) 89.59 79.64 51.61 48.22 52.04
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
13/34
Project Report on financial analysis of HCLT ltd.
13
LIQUIDITY RATIOS
(I) CURRENT RATIO
Current ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Current Ratio
0.81 0.99 1.41 1.12 1.59
The norm for the current ratio in IT industry is 1.5:1. The current ratio of HCLT is almost equal
to 1.19:1, which is less than the norm. On an average, for every rupee of current liability, HCLT
has \` 1.19 of current assets. The current ratio can be better judged if it is studied along with
ratios such as inventory turnover and receivables turnover.
The higher the receivables and inventory turnover, greater the firm's ability to pay its current
liabilities. Generally, a low current ratio indicates the firm's inability to meet its current
obligations. But a high current ratio may represent unnecessary blocking of liquid assets such as
cash and cash equivalents.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
14/34
Project Report on financial analysis of HCLT ltd.
14
(II) QUICK/ACID RATIO
Quick ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Quick Ratio
0.8 0.98 1.39 1.06 1.71
It indicates whether a firm has enough short-term assets to cover its immediate liabilities without
selling inventory. HCL was less than 1 and could not pay their current liabilities during 2006,
after that its shown improvement and ratio continue to rise.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
15/34
Project Report on financial analysis of HCLT ltd.
15
(III) CASH RATIO
Cash ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Cash Ratio
0.12 0.09 0.27 0.26 0.52
It can therefore determine if, and how quickly, the company can repay its short-term debt. HCLT
has shown continues improvement in cash ratio.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
16/34
Project Report on financial analysis of HCLT ltd.
16
LEVERAGE RATIOS
(I) DEBT EQIUITY RATIO
Debt equity ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Debt equity ratio
0.03 0.01 0.01 0.01 0.15
The debt-equity ratio is another leverage ratio that compares a company's total liabilities to its
total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and
obligors have committed to the company versus what the shareholders have committed.
Average debt equity ratio for HCLT is 0.04 over previous five financial years. Though the this
ratio steeply increased in the recent year but average is very low and it is good for a company to
has only 4% total funds as total debt for the company.
http://www.investopedia.com/terms/d/debtequityratio.asphttp://www.investopedia.com/terms/l/leverageratio.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/l/leverageratio.asphttp://www.investopedia.com/terms/d/debtequityratio.asphttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
17/34
Project Report on financial analysis of HCLT ltd.
17
(II) LONG TERM DEBT EQUITY RATIO
Long term debt equity ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Long term debtequity ratio 0.03 0.01 0.01 0.01 0.04
The long debt-equity ratio is another leverage ratio that compares a company's long term
liabilities to its total shareholders' equity. As we can see the average long term debt equity ratio
for HCLT is 0.01 which is very less and good for a company as the just has 1% of the total funds
of the company as long term debt.Though it increased in the recent year by 4 times, but it is still very low and good for an IT
organization.
http://www.investopedia.com/terms/d/debtequityratio.asphttp://www.investopedia.com/terms/l/leverageratio.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/l/leverageratio.asphttp://www.investopedia.com/terms/d/debtequityratio.asphttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
18/34
Project Report on financial analysis of HCLT ltd.
18
(III) INTEREST COVERAGE RATIO
Interest coverage ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Interest coverageratio 61.43 62.16 68.58 62.07 51.14
It is used to determine how easily a company can pay interest on outstanding debt. When a
company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be
questionable. An interest coverage ratio below 1 indicates the company is not generating
sufficient revenues to satisfy interest expenses. HCLT have high Interest coverage ratio.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
19/34
Project Report on financial analysis of HCLT ltd.
19
TURNOVER RATIOS
(I) TOTAL ASSETS TURNOVER RATIO
Total assets turnover ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Total assetsturnover ratio 0.5 1.22 1.13 1.51 1.25
As we can see the average total assets turnover ratio for HCLT over 5 financial years is 1.122.
The ratio was increasing from 2005 to 2008 and it dipped in recent year but broadly we can say
that the turnover of HCLT in all services is ` 1.122 over the usage of` 1 of total asset of the
company which can be considered as a good ratio.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
20/34
Project Report on financial analysis of HCLT ltd.
20
(II) SHORT TERM ASSET TURNOVER RATIO
Short term asset turnover ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Short term assetturnover ratio 2.53 3.31 3.13 3.27 2.73
As we can see the average short term assets turnover ratio for HCLT over 5 financial years is
2.994. The ratio is almost constant over the years, initially increasing from 2005 to 2008 and it
dipped in recent year but broadly we can say that the turnover of HCLT in all services is ` 2.994
over the usage of`
1 of short term asset of the company which can be considered as a good ratio.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
21/34
Project Report on financial analysis of HCLT ltd.
21
(III) WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Working capitalturnover ratio -31.86 -0.77 56.75 23.28 166.69
This ratio tries to highlight is how effectively working capital is being used in terms of the
turnover it can help to generate. HCLT management is effectively using working capital from
2008 to 2009.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
22/34
Project Report on financial analysis of HCLT ltd.
22
(IV) DEBTORS TURNOVER RATIO
Debtors turnover ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Debtors turnoverratio
6.09 6.37 5.55 5.45 3.79
It indicates the number of times average debtors (receivable) are turned over during a year. There
is decline in debtors turnover ratio implies inefficient management of debtors or less liquid
debtors. So we can say that HCLT is not effectively working on their debtors and the ratio is
keep on decreasing as it is not a good sign for any company.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
23/34
8/8/2019 FA Project Report on HCLT Ltd
24/34
Project Report on financial analysis of HCLT ltd.
24
PROFITABILITY RATIOS
(I) CAPITAL BASED PROFITABILITY
RATIOS(A) RETURN ON CAPITAL EMPLOYED (ROCE)
Return on capital employed ratio for HCLT:-
Year 2005 2006 2007 2008 2009
ROCE (%)
10.63 26.15 22.35 33.08 32.39
ROCE compares earnings with capital invested in the company. HCLT is showing continues
increase in earning with capital invested.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
25/34
Project Report on financial analysis of HCLT ltd.
25
(II) ASSET BASED PROFITABILITY RATIOS
(A) RETURN ON TOTAL ASSET (ROTA)
Return on capital employed ratio for HCLT:-
Year 2005 2006 2007 2008 2009
ROTA (%)
89.59 79.64 51.61 48.22 52.04
The Return on Assets of a company determines its ability to utilize the Assets employed in the
company efficiently and effectively to earn a good return. The ratio measures the percentage of
profits earned per rupee of Asset and thus is a measure of efficiency of the company in
generating profits on its Assets. HCLT company generates makes 52.04 % return on the Assets
that it employs in its operations.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
26/34
Project Report on financial analysis of HCLT ltd.
26
(III) SALES BASED PROFITABILITY RATIOS
(A) GROSS PROFIT MARGIN RATIO
Gross profit margin ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Gross profit marginratio (%)
19.97 22.12 24.88 21.86 24.33
The Gross Profit Margin illustrates the profit a company makes after paying off its Cost of
Goods sold (cost of inventory). Gross Profit Margin illustrates to us how efficient the
management is in using its labor and raw materials in the process of production. HCLT have a
high gross profit margin are more liquid and thus have more cash flow to spend on research &development expenses, marketing or investing. Comparing HCLT with its peers like TCS which
have slightly higher operating profit margin.
HCL have continual increase in operating profit margin from Jun 2005 to Jun 2009.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
27/34
Project Report on financial analysis of HCLT ltd.
27
(B) OPERATINF PROFIT MARGIN RATIO
Operation profit margin ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Operation profitmargin ratio (%)
24.63 26.69 24.86 26.58 29.72
The Operating Profit Margin will illustrate to you how efficiently the managers of a firm are
using business operations to generate profit. The higher the Operating Profit Margin, the better.
This is because a higher Operating Profit Margin shows the company can keep its costs under
control (successful cost accounting). A higher Operating Profit Margin can also mean sales are
increasing faster than costs, and the firm is in a relatively liquid position. HCLT have continual
increase in operating profit margin from Jun 2005 to Jun 2009.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
28/34
Project Report on financial analysis of HCLT ltd.
28
(C) NET PROFIT MARGIN RATIO
Net profit margin ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Net profit marginratio (%) 22.36 21 29.11 16.68 20.63
The Profit Margin of a company determines its ability to withstand competition and adverse
conditions like rising costs, falling prices or declining sales in the future. The ratio measures the
percentage of profits earned per dollar of sales and thus is a measure of efficiency of the
company. HCLT makes ` 0.20 on every ` 1 of sale.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
29/34
Project Report on financial analysis of HCLT ltd.
29
MARKET VALUATION RATIOS
(I) EARNING PER SHARE (EPS)
Earnings per share for HCLT:-
Year 2005 2006 2007 2008 2009
EPS
10.31 19.74 16.6 11.72 14.88
It tells how much profit was generated on a per share basis. HCLT have higher growth in 2009
compared to 2008. The average EPS for HCLT over previous five years is ` 14.65 which is good
as the market value of HCLT share is ` 2.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
30/34
Project Report on financial analysis of HCLT ltd.
30
(II) PRICE EARNING RATIO (P/E)
Price earnings ratio for HCLT:-
Year 2005 2006 2007 2008 2009
P/E
0.19 0.1 0.12 0.17 0.13
Its a valuation ratio of a company's current share price compared to its per-share earnings. There
is decline in P/E ratio from 2008 to 2009; it shows investors have low expectations from earning
growth.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
31/34
Project Report on financial analysis of HCLT ltd.
31
(III) DIVIDEND PER SHARE (DPS)
Dividend per share for HCLT:-
Year 2005 2006 2007 2008 2009
DPS
16 16 8 9 7
DPS shows how much the shareholders were actually paid by way of dividends. There is decline
by HCLT in paying dividends to share holders.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
32/34
Project Report on financial analysis of HCLT ltd.
32
(IV) DIVIDEND PAYOUT RATIO
Dividend payout ratio for HCLT:-
Year 2005 2006 2007 2008 2009
Dividend payoutratio 1.55 0.81 0.48 0.77 0.47
It indicates the proportion of earnings that are used to pay dividends to shareholders.
There is reduction in dividends paid and is looked poorly upon by investors, and the stock
price usually depreciates as investors seek other dividend paying stocks .
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
33/34
Project Report on financial analysis of HCLT ltd.
33
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. So it will be a wise decision to
invest in HCLT.
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.
http://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg8/8/2019 FA Project Report on HCLT Ltd
34/34
Project Report on financial analysis of HCLT ltd.
REFERENCES
[1] ITAA.org, p30, Accessed March 3, 2008.[2] http://www.abet.org/forms.shtml#For_Computing_Programs_Only
[3]http://www.sigite.org/index.php?option=com_ view=wrapper&Itemid=8.
[4]Gartner Says Worldwide IT Services Revenue Declined 5.3 Percent in 2009, Gartner
Newsroom
[5] Bird, M. (2010). Modern Management Guide to Information Technology. Create Space.
http://harvardbookstore.biz
[6] http://en.wikipedia.org/wiki/HCL_Technologies
http://www.itaa.org/es/docs/Information%20Technology%20Definitions.pdfhttp://www.itaa.org/es/docs/Information%20Technology%20Definitions.pdfhttp://www.gartner.com/it/page.jsp?id=1363713http://www.gartner.com/it/page.jsp?id=1363713http://www.gartner.com/it/page.jsp?id=1363713http://harvardbookstore.biz/http://harvardbookstore.biz/http://harvardbookstore.biz/http://www.gartner.com/it/page.jsp?id=1363713http://www.itaa.org/es/docs/Information%20Technology%20Definitions.pdfhttp://en.wikipedia.org/wiki/File:HCL_Technologies_logo.svg