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TCS: A Dull End to the Year - Views on News from Equitymaster
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TCS: A Dull End to the Year
Apr 21, 2017

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the fourth quarter and full year FY17. The company has reported a 0.3% QoQ decrease in consolidated sales while the consolidated net profit was down 12.3% QoQ.

Performance Summary
  • Revenues decreased by 0.3% QoQ in 4QFY17 in rupee terms. Revenues increased by 1% QoQ in constant currency terms. In US dollar terms, revenues increased by 1.5% QoQ. Volumes were up by 1.7% QoQ.
  • The operating margin was under a bit of pressure due to the dull topline performance. It was down sequentially to 27.4% 4QFY17. The operating profit decreased by 1.2% QoQ.
  • The other income decreased by 16.4% QoQ and came in at Rs 9,970 million for the quarter.
  • The net profit for the quarter came in at Rs 59,980 million. The net margin was 20.2%
  • The management has declared a final dividend of Rs 27.5 per share.
  • The company has received shareholder approval for a buyback at a price of Rs 2,850. The size of the buyback is Rs 160 billion, the largest in the history of Indian capital markets. This works out to 56.14 million shares or about 2.85% of the company's share capital.

    Consolidated Financial Snapshot
    (Rs m) 3QFY17 4QFY17 Change FY16 FY17 Change
    Sales 297,350 296,420 -0.3% 1,086,460 1,179,660 8.6%
    Expenditure 215,060 215,100 0.0% 779,690 856,550 9.9%
    Operating profit (EBITDA) 82,290 81,320 -1.2% 306,770 323,110 5.3%
    Operating profit margin (%) 27.7% 27.4% 28.2% 27.4%
    Other income 11,920 9,970 -16.4% 30,840 42,210 36.9%
    Finance Costs 70 80 14.3% 330 320 -3.0%
    Depreciation 4,960 5,050 1.8% 18,880 19,870 5.2%
    Profit before tax 89,180 86,160 -3.4% 318,400 345,130 8.4%
    Tax 21,040 19,940 -5.2% 75,020 81,560 8.7%
    Minority Interest 40 120 200.0% 1,090 630 -42.2%
    Other comprehensive income 310 -6,120 2,690 -1,770
    Profit after tax/(loss) 68,410 59,980 -12.3% 244,980 261,170 6.6%
    Net profit margin (%) 23.0% 20.2% 22.5% 22.1%
    No. of shares 1,970.4
    Diluted earnings per share (Rs)* 132.5
    P/E ratio (x)* 17.4

    *On a trailing 12 months basis


    Revenue Breakup
    (Rs m)      
    On the basis of industry verticals 3QFY17 4QFY17 Change
    BFSI 120,129 118,272 -1.5%
    Communications & Media 31,519 33,495 6.3%
    Manufacturing 31,519 31,421 -0.3%
    Retail & CPG 40,142 38,238 -4.7%
    Hi-Tech 16,057 16,600 3.4%
    Life Sciences & Healthcare 22,004 22,528 2.4%
    Travel & Hospitality 11,299 11,560 2.3%
    Energy & Utilities 13,381 13,339 -0.3%
    Others 11,299 10,968 -2.9%
    On the basis of service offerings
    Application Development & Maintenance 110,614 111,750 1.0%
    Enterprise Solutions and Consulting 52,036 51,281 -1.5%
    Assurance Services 26,762 26,678 -0.3%
    Engg. & Industrial Services 14,570 14,821 1.7%
    Infrastructure Services 49,955 48,020 -3.9%
    Asset Leverage Solutions 8,921 8,596 -3.6%
    BPO 34,493 35,274 2.3%
    On the basis of geography
    North America 163,543 157,992 -3.4%
    Latin America 6,542 6,225 -4.8%
    UK 39,548 40,610 2.7%
    Continental Europe 33,006 34,978 6.0%
    India 18,733 20,157 7.6%
    Asia Pacific 28,546 28,753 0.7%
    MEA 7,434 7,707 3.7%
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Jun 27, 2017 10:47 AM

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