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Tata Consultancy Services (TCS): A Muted Quarter - Views on News from Equitymaster
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Tata Consultancy Services (TCS): A Muted Quarter
Oct 15, 2016

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the second quarter of FY17. The company has reported a 0.1% QoQ decrease in consolidated sales while the consolidated net profit was up 4.4% QoQ.

Performance Summary
  • Net sales decreased by 0.1% QoQ in 2QFY17 in rupee terms. Sales increased by 1% QoQ in constant currency terms. Volumes were up by 1.3% QoQ.
  • The operating performance was muted due to the poor topline performance. The operating margin increased from 26.7% in 1QFY17 to 27.7% 2QFY17. On an absolute basis, the operating profit increased by 3.5% QoQ.
  • The other income increased by 8.4% QoQ and came in at Rs 10,570 million for the quarter.
  • The net profit for the quarter came in at Rs 67,810 million, up 4.4% QoQ.
  • The management has declared an interim dividend of Rs 6.5 per share. The record date and payment date for the same are 25 October 2016 and 02 November, 2016 respectively.

    Consolidated Financial Snapshot
    (Rs m) 1QFY17 2QFY17 Change 1HFY16 1HFY17 Change
    Sales 293,050 292,840 -0.1% 528,330 585,890 10.9%
    Expenditure 214,680 211,710 -1.4% 378,100 426,390 12.8%
    Operating profit (EBITDA) 78,370 81,130 3.5% 150,230 159,500 6.2%
    Operating profit margin (%) 26.7% 27.7% 28.4% 27.2%
    Other income 9,750 10,570 8.4% 14,620 20,320 39.0%
    Finance Costs 120 50 -58.3% 150 170 13.3%
    Depreciation 4,900 4,960 1.2% 9,220 9,860 6.9%
    Profit before tax 83,100 86,690 4.3% 155,480 169,790 9.2%
    Tax 19,920 20,660 3.7% 36,820 40,580 10.2%
    Minority Interest 160 310 93.8% 790 470 -40.5%
    Other comprehensive income 1,950 2,090 7.2% 1,100 4,040 267.3%
    Profit after tax/(loss) 64,970 67,810 4.4% 118,970 132,780 11.6%
    Net profit margin (%) 22.2% 23.2% 22.5% 22.7%
    No. of shares 1,970.4
    Diluted earnings per share (Rs)* 131.3
    P/E ratio (x)* 18.0

    *On a trailing 12 months basis

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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
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