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TCS: Performance Along Expected Lines - Views on News from Equitymaster

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TCS: Performance Along Expected Lines
Jan 12, 2018

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the third quarter of FY18. The company reported a 1.2% QoQ increase in consolidated sales while the consolidated net profit was also up 1.2% QoQ.

Performance Summary
  • Revenues increased 1.2% QoQ in 3QFY18 in rupee terms. Revenues increased 1.3% QoQ in constant currency terms. In US dollar terms, revenues increased 1% QoQ. Volumes were up 1.6% QoQ.
  • The operating performance was decent. The operating margin came in flat sequentially at 26.8% for 3QFY18. On an absolute basis, the operating profit increased 1.4% QoQ.
  • The other income increased 6.2% QoQ and came in at Rs 8,700 million for the quarter.
  • The net profit for the quarter came in at Rs 66,310 million, up 1.2% QoQ.
  • The company declared a third interim dividend of Rs 7 per share. The record date and payment date for the same are 23rd and 31st January, respectively.

    Consolidated Financials
    (Rs m) 2QFY18 3QFY18 Change 9MFY17 9MFY18 Change
    Sales 305,410 309,040 1.2% 883,240 910,290 3.1%
    Expenditure 223,700 226,170 1.1% 641,450 671,650 4.7%
    Operating profit (EBITDA) 81,710 82,870 1.4% 241,790 238,640 -1.3%
    Operating profit margin (%) 26.8% 26.8%   27.4% 26.2%  
    Other income 8,190 8,700 6.2% 32,240 26,480 -17.9%
    Finance Costs 70 60 -14.3% 240 400 66.7%
    Depreciation & amortisation 5,040 5,060 0.4% 14,820 15,090 1.8%
    Profit before tax 84,790 86,450 2.0% 258,970 249,630 -3.6%
    Tax 20,120 21,000 4.4% 61,620 60,080 -2.5%
    Profit after tax 64,670 65,450 1.2% 197,350 189,550 -4.0%
    Minority Interest 140 140 0.0% 540 330 -38.9%
    Net Profit 64,530 65,310 1.2% 196,810 189,220 -3.9%
    Net profit margin (%) 21.1% 21.1%   22.3% 20.8%  
    No. of shares         1,914.3  
    Diluted earnings per share (Rs)*         132.5  
    P/E ratio (x)*         20.9  

    *On a trailing 12 months basis


    Segmental Performance
    (Rs m) 2QFY18 3QFY18 Change
    On the basis of industry verticals      
    BFSI 100,785 99,202 -1.6%
    Retail & CPG 36,344 38,630 6.3%
    Communications & Media 22,295 22,869 2.6%
    Manufacturing 22,906 23,487 2.5%
    Life Sciences & Healthcare 21,990 22,560 2.6%
    Energy & Utilities 12,827 13,907 8.4%
    Travel & Hospitality 11,606 11,744 1.2%
    Technology & Services 24,738 24,723 -0.1%
    Regional Markets & Others 51,920 51,919 0.0%
    On the basis of geography      
    North America 158,508 160,701 1.4%
    Latin America 6,719 6,799 1.2%
    UK 42,757 43,575 1.9%
    Continental Europe 40,925 41,720 1.9%
    India 19,241 19,470 1.2%
    Asia Pacific 29,930 29,359 -1.9%
    MEA 7,330 7,417 1.2%
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  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Equitymaster has financial interest in TCS.
  3. Equitymaster's investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company. The investment is however made solely for building track record of its services.
  4. Equitymaster's Associate has financial interest in TCS.
  5. Equitymaster's Research Analyst or his/her relative have no financial interest in the subject company.
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Nov 22, 2018 03:37 PM

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