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TCS: Maintaining the growth momentum! - Views on News from Equitymaster
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TCS: Maintaining the growth momentum!
Oct 11, 2005

TCS has announced its results for the second quarter and half-year ended September 2005. Driven by strong growth in its key service lines and geographies, topline growth has shown a strong sequential performance. However, due to higher employee costs, margins reduced sequentially by 60 basis points. Considerably higher other income and lower minority interest has helped the company to grow net profit at a decent sequential pace. The performance for the half-year has been encouraging as well, with considerably lower expenses (as a percentage of revenues) resulting in margins soaring and this was the primary reason for the considerably higher net profit recorded by TCS.

Financial performance (US GAAP Consolidated): A snapshot
(Rs m) 1QFY06 2QFY06 Change 1HFY05 1HFY06 Change
Sales 27,094 29,513 8.9% 45,643 56,608 24.0%
Expenditure 19,676 21,593 9.7% 35,893 41,268 15.0%
Operating profit (EBIT)** 7,419 7,921 6.8% 9,749 15,340 57.3%
Operating profit margin (%) 27.4% 26.8%   21.4% 27.1%  
Other income 98 170 72.9% 1,634 269 -83.6%
Profit before tax 7,517 8,091 7.6% 11,383 15,608 37.1%
Equity in net earnings of affiliates 2 3 36.1% 73 5 -93.5%
Minority interest (85) (43)   (144) (129) -10.7%
Extraordinary income/(expenditure) - -   - -  
Tax 1,247 1,317 5.6% 2,525 2,564 1.5%
Profit after tax/(loss) 6,187 6,734 8.8% 8,787 12,920 47.0%
Net profit margin (%) 22.8% 22.8%   19.3% 22.8%  
No. of shares 480.1 480.1   480.1 480.1  
Diluted earnings per share* (Rs) 51.5 56.1   36.6 53.8  
P/E ratio (x)         27.3  
(* annualised)            

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