TCS 2018-19 Annual Report Analysis

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TCS 2018-19 Annual Report Analysis
Tue, 21 May

TCS has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

TCS Income Statement Analysis

  • Operating income during the year rose 19.0% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 21.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 27.0% in FY19 as against 26.4% in FY18.
  • Depreciation charges increased by 2.1% and finance costs increased by 280.8% YoY, respectively.
  • Other income grew by 18.4% YoY.
  • Net profit for the year grew by 22.0% YoY.
  • Net profit margins during the year grew from 20.4% in FY18 to 20.9% in FY19.

TCS Income Statement 2018-19

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Net Sales Rs m 1,231,040 1,464,630 19.0%
Other income Rs m 36,420 43,110 18.4%
Total Revenues Rs m 1,267,460 1,507,740 19.0%
Gross profit Rs m 325,160 395,060 21.5%
Depreciation Rs m 20,140 20,560 2.1%
Interest Rs m 520 1,980 280.8%
Profit before tax Rs m 340,920 415,630 21.9%
Tax Rs m 82,120 100,010 21.8%
Profit after tax Rs m 258,800 315,620 22.0%
Gross profit margin % 26.4 27.0
Effective tax rate % 24.1 24.1
Net profit margin % 20.4 20.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



TCS Balance Sheet Analysis

  • The company's current liabilities during FY19 stood at Rs 221 billion as compared to Rs 178 billion in FY18, thereby witnessing an increase of 23.9%.
  • Long-term debt down at Rs 440 million as compared to Rs 540 million during FY18, a fall of 18.5%.
  • Current assets rose 13% and stood at Rs 921 billion, while fixed assets rose 0% and stood at Rs 133 billion in FY19.
  • Overall, the total assets and liabilities for FY19 stood at Rs 1,149 billion as against Rs 1,063 billion during FY18, thereby witnessing a growth of 8%.

TCS Balance Sheet as on March 2019

No. of Mths Year Ending 12 Mar-18* 12 Mar-19* % Change
Networth Rs m 851,280 894,460 5.1
 
Current Liabilities Rs m 178,280 220,840 23.9
Long-term Debt Rs m 540 440 -18.5
Total Liabilities Rs m 1,062,960 1,149,430 8.1
 
Current assets Rs m 812,240 921,310 13.4
Fixed Assets Rs m 132,510 132,530 0.0
Total Assets Rs m 1,062,960 1,149,430 8.1
* 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 FY19 stood at Rs 286 billion, an improvement of 14.1% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY19 stood at Rs 16 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY19 stood at Rs -279 billion on a YoY basis.
  • Overall, net cash flows for the company during FY19 stood at Rs 23 billion from the Rs 13 billion net cash flows seen during FY18.

TCS Cash Flow Statement 2018-19

Particulars No. of months 12 12 % Change
Year Ending Mar-18 Mar-19
Cash Flow from Operating Activities Rs m 250,670 285,930 14.1%
Cash Flow from Investing Activities Rs m 28,860 15,960 -44.7%
Cash Flow from Financing Activities Rs m -268,850 -278,970 -
Net Cash Flow Rs m 12,860 23,410 82.0%
* 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 84.1, an decline from the EPS of Rs 135.2 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 2,131.2, stands at 25.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 11.2 times, while the price to sales ratio stands at 6.8 times.
  • The company's price to cash flow (P/CF) ratio stood at 24.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-18* 12 Mar-19*
Sales per share (Unadj.) Rs 643.1 390.3
TTM Earnings per share Rs 135.2 84.1
Diluted earnings per share Rs 67.6 82.4
Price to Cash Flow x 14.6 24.3
TTM P/E ratio x 12.9 25.9
Price / Book Value ratio x 6.1 11.2
Market Cap Rs m 4,079,735 8,159,459
Dividends per share (Unadj.) Rs 29.0 30.0
* 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 deteriorated and stood at 4.2x during FY19, from 4.6x during FY18. 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 210.9x during FY19, from 656.6x during FY18. 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 improved and stood at 35.3% during FY19, from 30.4% during FY19. 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 46.7% during FY19, from 40.1% during FY18. 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 improved and stood at 27.6% during FY19, from 24.4% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-18* 12 Mar-19*
Current ratio x 4.6 4.2
Debtors’ Days Days 74 68
Interest coverage x 656.6 210.9
Debt to equity ratio x 0.0 0.0
Return on assets % 24.4 27.6
Return on equity % 30.4 35.3
Return on capital employed % 40.1 46.7
* 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 1,779.0 to Rs 2,131.2, registering a gain of Rs 352.2 or around 19.8%.

Meanwhile, the S&P BSE IT Index is trading at Rs 15,424.7 (down 0.6%). Over the last one year it has moved up from 13,223.1 to 15,424.7, a gain of 2,202 points (up 16.6%).

Overall, the S&P BSE SENSEX is up 14.1% over the year.

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

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