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TCS: A Solid Performance - Views on News from Equitymaster
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TCS: A Solid Performance
Apr 18, 2016 | Updated on Apr 19, 2016

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the fourth quarter and full year FY16. The company has reported a 4% QoQ increase in consolidated sales while consolidated net profit was up 5.4% QoQ for 4QFY16. Here is our analysis of the results.

Performance summary
  • Net sales increased by 4% QoQ in 4QFY16 in rupee terms and 2.1% QoQ in constant currency terms. Volumes were up by 3.2% QoQ.
  • The operating performance was muted. The operating margin fell from 28.2% in 3QFY16 to 27.7% in 4QFY16. On an absolute basis, the operating profit increased by 2.2% QoQ.
  • The other income increased by 32.1% QoQ and came in at Rs 9,170 million for the quarter.
  • The net profit for the quarter came in at Rs 64,131 million, up 5.4% QoQ.
  • The management has declared a final dividend of Rs 27 per share.

    Consolidated Financial Snapshot
    (Rs m) 3QFY16 4QFY16 Change FY15 FY16 Change
    Sales 273,640 284,486 4.0% 946,484 1,086,462 14.8%
    Expenditure 196,489 205,613 4.6% 701,667 780,564 11.2%
    Operating profit (EBITDA) 77,151 78,873 2.2% 244,817 305,898 24.9%
    Operating profit margin (%) 28.2% 27.7% 25.9% 28.2%
    Other income 6,942 9,170 32.1% 32,299 30,539 -5.5%
    Finance Costs 51 61 19.6% 1,042 198 -81.0%
    Depreciation 4,850 5,072 4.6% 17,987 19,480 8.3%
    Exceptional Items 0 0 4,898 0
    Profit before tax 79,192 82,910 4.7% 262,985 316,759 20.4%
    Tax 18,164 18,679 2.8% 62,388 73,009 17.0%
    Minority Interest 194 100 -48.4% 2,075 831 -59.9%
    Profit after tax/(loss) 60,834 64,131 5.4% 198,522 242,918 22.4%
    Net profit margin (%) 22.2% 22.5% 21.0% 22.4%
    No. of shares 1,970.4
    Diluted earnings per share (Rs)* 123.3
    P/E ratio (x)* 20.5

    *On a trailing 12 months basis

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INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  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 and its Associates have financial interest in the Tata Consultancy Services Limited.
  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.
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Oct 19, 2017 07:33 PM

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