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TCS 2017-18 Annual Report Analysis

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TCS 2017-18 Annual Report Analysis
Wed, 8 Aug

TCS has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

TCS Income Statement Analysis

  • Operating income during the year rose 4.4% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 0.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 26.4% in FY18 as against 27.4% in FY17.
  • Depreciation charges and finance costs increased by 1.4% YoY and 62.5% YoY, respectively.
  • Other income declined by 13.7% YoY.
  • Net profit for the year declined by 1.8% YoY.
  • Net profit margins during the year declined from 21.6% in FY17 to 20.4% in FY18.

TCS Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 1,179,660 1,231,040 4.4%
Other income Rs m 42,210 36,420 -13.7%
Total Revenues Rs m 1,221,870 1,267,460 3.7%
Gross profit Rs m 323,110 325,160 0.6%
Depreciation Rs m 19,870 20,140 1.4%
Interest Rs m 320 520 62.5%
Profit before tax Rs m 345,130 340,920 -1.2%
Tax Rs m 81,560 82,120 0.7%
Profit after tax Rs m 263,570 258,800 -1.8%
Gross profit margin % 27.4 26.4
Effective tax rate % 23.6 24.1
Net profit margin % 21.6 20.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



TCS Balance Sheet Analysis

  • The company's current liabilities during FY18 stood at Rs 178 billion as compared to Rs 145 billion in FY17, thereby witnessing an increase of 22.9%.
  • Long-term debt down at Rs 540 million as compared to Rs 710 million during FY17, a fall of 23.9%.
  • Current assets rose 1% and stood at Rs 812 billion, while fixed assets rose 0% and stood at Rs 133 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 1,063 billion as against Rs 1,033 billion during FY17, thereby witnessing a growth of 3%.

TCS Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 862,140 849,561 -1.5
 
Current Liabilities Rs m 145,120 178,280 22.9
Long-term Debt Rs m 710 540 -23.9
Total Liabilities Rs m 1,032,520 1,062,960 2.9
 
Current assets Rs m 803,160 812,240 1.1
Fixed Assets Rs m 132,420 132,510 0.1
Total Assets Rs m 1,032,520 1,062,960 2.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



TCS Cash Flow Statement Analysis

  • TCS's cash flow from operating activities (CFO) during FY18 stood at Rs 251 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY18 stood at Rs 29 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY18 stood at Rs -269 billion on a YoY basis.
  • Overall, net cash flows for the company during FY18 stood at Rs 13 billion from the Rs -27 billion net cash flows seen during FY17.

TCS Cash Flow Statement 2017-18

Particulars No. of months 12 12 % Change
Year Ending Mar-17 Mar-18
Cash Flow from Operating Activities Rs m 252,230 250,670 -0.6%
Cash Flow from Investing Activities Rs m -167,320 28,860 -
Cash Flow from Financing Activities Rs m -110,260 -268,850 -
Net Cash Flow Rs m -26,980 12,860 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for TCS

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 135.2, an improvement from the EPS of Rs 133.8 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,975.0, stands at 13.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 6.2 times, while the price to sales ratio stands at 4.3 times.
  • The company's price to cash flow (P/CF) ratio stood at 13.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Sales per share (Unadj.) Rs 598.7 643.1
TTM Earnings per share Rs 133.8 135.2
Diluted earnings per share Rs 137.7 135.2
Price to Cash Flow x 13.7 13.6
TTM P/E ratio x 14.3 13.9
Price / Book Value ratio x 5.5 6.2
Market Cap Rs m 3,891,599 3,780,717
Dividends per share (Unadj.) Rs 47.0 29.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for TCS

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 4.6x during FY18, from 5.5x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

    Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 656.6x during FY18, from 1,079.5x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

  • Profitability Ratios
  • Return on Equity (ROE): The ROE for the company declined and down at 30.5% during FY18, from 30.6% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

    Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 40.2% during FY18, from 40.0% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

    Return on Assets (ROA): The ROA of the company declined and down at 24.4% during FY18, from 25.6% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Current ratio x 5.5 4.6
Debtors’ Days Days 70 74
Interest coverage x 1,079.5 656.6
Debt to equity ratio x 0.0 0.0
Return on assets % 25.6 24.4
Return on equity % 30.6 30.5
Return on capital employed % 40.0 40.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



To see how TCS has performed over the last 5 years, please visit here.

TCS Share Price Performance

Over the last one year, TCS share price has moved up from Rs 1,248.9 to Rs 1,975.0, registering a gain of Rs 726.1 or around 58.1%.

Meanwhile, the S&P BSE IT Index is trading at Rs 14,566.6 (down 0.1%). Over the last one year it has moved up from 10,222.5 to 14,566.6, a gain of 4,344 points (up 42.5%).

Overall, the S&P BSE SENSEX is up 17.4% over the year.

(To know more, check out historical annual results for TCS and quarterly results for TCS)

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