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TCS: A stable quarter - Views on News from Equitymaster
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TCS: A stable quarter
Jan 12, 2016

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the third quarter of the financial year 2015-2016. The company has reported a 0.7% quarter-on-quarter (QoQ) increase in its consolidated sales while consolidated net profit was flat sequentially. Here is our analysis of the results.

Performance summary

  • Net sales increased by 0.7% QoQ in 3QFY16. Volumes were up by 0.4% QoQ.
  • The operating performance was muted. The operating margin fell from 28.7% in 2QFY16 to 28.2% in 3QFY16. On an absolute basis, the operating profit decreased by 1% QoQ.
  • The other income decreased by 1.2% QoQ and came in at Rs 6,942 m for the quarter.
  • The net profit came in at Rs 60,834 m. This was flat sequentially.
  • The management has declared an interim dividend of Rs 5.5 per share. The record date for the same is 22 Jan 2016 and it will be paid out on 29 Jan 2016.

Consolidated Financial Snapshot

(Rs m) 2QFY16 3QFY16 Change 9MFY15 9MFY16 Change
Sales 271,655 273,640 0.7% 704,287 801,976 13.9%
Expenditure 193,732 196,489 1.4% 502,277 574,951 14.5%
Operating profit (EBITDA) 77,923 77,151 -1.0% 202,010 227,025 12.4%
Operating profit margin (%) 28.7% 28.2%   28.7% 28.3%  
Other income 7,024 6,942 -1.2% 20,937 21,369 2.1%
Finance Costs 44 51 14.5% 931 138 -85.2%
Depreciation 4,850 4,850 0.0% 13,286 14,408 8.4%
Exceptional Items - -   4,898 -  
Profit before tax 80,052 79,193 -1.1% 213,627 233,848 9.5%
Tax 18,971 18,164 -4.3% 50,575 54,331 7.4%
Minority Interest 234 194 -17.1% 1,657 731 -55.9%
Profit after tax/(loss) 60,847 60,834 0.0% 161,395 178,787 10.8%
Net profit margin (%) 22.4% 22.2%   22.9% 22.3%  
No. of shares         1,958.7  
Diluted earnings per share (Rs)*         110.2  
P/E ratio (x)*         20.7  

* trailing 12 month earnings

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