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TCS 2019-20 Annual Report Analysis
Tue, 31 Mar

TCS has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

TCS Income Statement Analysis

  • Operating income during the year rose 7.2% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 6.6% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 26.8% in FY20 as against 27.0% in FY19.
  • Depreciation charges increased by 71.6% and finance costs increased by 366.7% YoY, respectively.
  • Other income grew by 6.5% YoY.
  • Net profit for the year grew by 2.8% YoY.
  • Net profit margins during the year declined from 21.5% in FY19 to 20.7% in FY20.

TCS Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 1,464,630 1,569,490 7.2%
Other income Rs m 43,110 45,920 6.5%
Total Revenues Rs m 1,507,740 1,615,410 7.1%
Gross profit Rs m 395,060 421,090 6.6%
Depreciation Rs m 20,560 35,290 71.6%
Interest Rs m 1,980 9,240 366.7%
Profit before tax Rs m 415,630 422,480 1.6%
Tax Rs m 100,010 98,010 -2.0%
Profit after tax Rs m 315,620 324,470 2.8%
Gross profit margin % 27.0 26.8
Effective tax rate % 24.1 23.2
Net profit margin % 21.5 20.7
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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TCS Balance Sheet Analysis

  • The company's current liabilities during FY20 stood at Rs 271 billion as compared to Rs 221 billion in FY19, thereby witnessing an increase of 22.5%.
  • Current assets fell 2% and stood at Rs 902 billion, while fixed assets rose 38% and stood at Rs 278 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 1,181 billion as against Rs 1,123 billion during FY19, thereby witnessing a growth of 5%.

TCS Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 894,460 841,260 -5.9
 
Current Liabilities Rs m 220,840 270,600 22.5
Long-term Debt Rs m 0 0 0.0
Total Liabilities Rs m 1,122,870 1,180,710 5.2
 
Current assets Rs m 921,310 902,370 -2.1
Fixed Assets Rs m 201,560 278,340 38.1
Total Assets Rs m 1,122,870 1,180,710 5.2
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



TCS Cash Flow Statement Analysis

  • TCS's cash flow from operating activities (CFO) during FY20 stood at Rs 324 billion, an improvement of 13.2% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs 86 billion, an improvement of 436.7% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs -399 billion on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs 14 billion from the Rs 23 billion net cash flows seen during FY19.

TCS Cash Flow Statement 2019-20

Particulars No. of months 12 12 % Change
Year Ending Mar-19 Mar-20
Cash Flow from Operating Activities Rs m 285,930 323,690 13.2%
Cash Flow from Investing Activities Rs m 15,960 85,650 436.7%
Cash Flow from Financing Activities Rs m -278,970 -399,150 -
Net Cash Flow Rs m 23,410 14,220 -39.3%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for TCS

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 86.5, an improvement from the EPS of Rs 84.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 1,823.1, stands at 20.6 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 7.9 times, while the price to sales ratio stands at 4.4 times.
  • The company's price to cash flow (P/CF) ratio stood at 19.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Sales per share (Unadj.) Rs 390.3 418.3
TTM Earnings per share Rs 84.1 86.5
Diluted earnings per share Rs 86.3 88.7
Price to Cash Flow x 21.8 19.8
TTM P/E ratio x 23.2 20.6
Price / Book Value ratio x 11.3 8.5
Market Cap Rs m 10,106,861 7,130,281
Dividends per share (Unadj.) Rs 30.0 73.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for TCS

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 3.3x during FY20, from 4.2x during FY19. 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 46.7x during FY20, from 210.9x during FY19. 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 38.6% during FY20, from 35.3% during FY20. 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 51.3% during FY20, from 46.7% during FY19. 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 28.3% during FY20, from 28.3% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Current ratio x 4.2 3.3
Debtors’ Days Days 7 7
Interest coverage x 210.9 46.7
Debt to equity ratio x 0.0 0.0
Return on assets % 28.3 28.3
Return on equity % 35.3 38.6
Return on capital employed % 46.7 51.3
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 down from Rs 2,000.4 to Rs 1,823.1, registering a loss of Rs 177.4 or around 8.9%.

Meanwhile, the S&P BSE IT Index is trading at Rs 12,842.7 (up 3.0%). Over the last one year it has moved down from 15,280.3 to 12,842.7, a loss of 2,438 points (down 16.0%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

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

Annual Report FAQs

What is the current share price of TCS?

TCS currently trades at Rs 4,031.6 per share. You can check out the latest share price performance of TCS here...

What was the revenue of TCS in FY20? How does it compare to earlier years?

The revenues of TCS stood at Rs 1,615,410 m in FY20, which was up 7.1% compared to Rs 1,507,740 m reported in FY19.

TCS' revenue has grown from Rs 1,117,300 m in FY16 to Rs 1,615,410 m in FY20.

Over the past 5 years, the revenue of TCS has grown at a CAGR of 9.7%.

What was the net profit of TCS in FY20? How does it compare to earlier years?

The net profit of TCS stood at Rs 324,470 m in FY20, which was up 2.8% compared to Rs 315,620 m reported in FY19.

This compares to a net profit of Rs 258,800 m in FY18 and a net profit of Rs 263,570 m in FY17.

Over the past 5 years, TCS net profit has grown at a CAGR of 7.5%.

What does the cash flow statement of TCS reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of TCS reveals:

  • Cash flow from operations increased in FY20 and stood at Rs 323,690 m as compared to Rs 285,930 m in FY19.
  • Cash flow from investments increased in FY20 and stood at Rs 85,650 m as compared to Rs 15,960 m in FY19.
  • Cash flow from financial activity decreased in FY20 and stood at Rs -399,150 m as compared to Rs -278,970 m in FY19.

Here's the cash flow statement of TCS for the past 5 years.

(Rs m)FY16FY17FY18FY19FY20
From Operations191,090252,230250,670285,930323,690
From Investments-51,500-167,32028,86015,96085,650
From Financial Activity-96,660-110,260-268,850-278,970-399,150
Net Cashflow44,330-26,98012,86023,41014,220

What does the Key Ratio analysis of TCS reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of TCS reveals:

  • Operating profit margins witnessed a fall and stood at 26.8% in FY20 as against 27.0% in FY19.
  • Net profit margins declined from 21.5% in FY19 to 20.7% in FY20.
  • Debt to Equity ratio for FY20 stood at 0.0 as compared to 0.0 in FY19.

Here's the ratio/financial analysis of TCS for the past 5 years.

 FY16FY17FY18FY19FY20
Operating Profit Margin (%)28.227.426.427.026.8
Net Profit Margin (%)22.422.321.021.520.7
Debt to Equity Ratio (x)0.00.00.00.00.0

Read: Latest Annual Report Analysis of TCS

 

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1 Responses to "TCS 2019-20 Annual Report Analysis"

Harshal

Oct 2, 2020

Anual report

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