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TCS: Maintains the momentum

Oct 13, 2015
India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the second quarter of the financial year 2015-2016. The company has reported a 5.8% quarter-on-quarter (QoQ) increase in its consolidated sales and a 6.5% QoQ increase in its consolidated net profit in 2QFY16. Here is our analysis of the results.
Performance summary
  • Net sales increased by 5.8% QoQ in 2QFY16. Volumes were up by 4.9% QoQ.
  • The operating performance remained strong. The operating margin improved from 28% in 1QFY16 to 28.7% in 2QFY16. On an absolute basis, the operating profits increased by 8.3% QoQ.
  • The other income decreased by 5.1% QoQ and came in at Rs 7,024 m for the quarter. The other income includes a forex gain of Rs 2,035.1 m.
  • The net profit came in at Rs 60,847 m. This was higher by 6.5% QoQ. The 1QFY16 net profit has been adjusted to incorporate the merger of CMC with the company. Thus, the minority interest has declined 22.4% QoQ in 2QFY16.
  • The company has declared a second interim dividend of Rs 5.50 per share to be paid out to share holders on 30 October 2015. The record date for the same is 26 October 2015.

Consolidated Financial Snapshot

(Rs m) 1QFY16 2QFY16 Change 1HFY15 1HFY16 Change
Sales 256,681 271,655 5.8% 459,275 528,336 15.0%
Expenditure 184,730 193,732 4.9% 327,746 378,462 15.5%
Operating profit (EBITDA) 71,952 77,923 8.3% 131,530 149,874 13.9%
Operating profit margin (%) 28.0% 28.7%   28.6% 28.4%  
Other income 7,403 7,024 -5.1% 14,498 14,427 -0.5%
Finance Costs 43 44 2.8% 752 87 -88.4%
Depreciation 4,708 4,850 3.0% 8,667 9,558 10.3%
Exceptional Items - -   4,898 -  
Profit before tax 74,604 80,052 7.3% 141,506 154,656 9.3%
Tax 17,195 18,971 10.3% 32,337 36,166 11.8%
Minority Interest 302 234 -22.4% 1,050 536 -48.9%
Profit after tax/(loss) 57,107 60,847 6.5% 108,120 117,953 9.1%
Net profit margin (%) 22.2% 22.4%   23.5% 22.3%  
No. of shares         1,958.7  
Diluted earnings per share (Rs)*         106.4  
P/E ratio (x)*         23.3  

*On a trailing 12 months basis

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