TCS 2019-20 Annual Report Analysis

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TCS 2019-20 Annual Report Analysis
Wed, 5 Aug

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 20.9% in FY19 to 20.1% 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 % 20.9 20.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, 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 63% and stood at Rs 216 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 1,209 billion as against Rs 1,149 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 440 0 -100.0
Total Liabilities Rs m 1,149,430 1,208,990 5.2
 
Current assets Rs m 921,310 902,370 -2.1
Fixed Assets Rs m 132,530 215,510 62.6
Total Assets Rs m 1,149,430 1,208,990 5.2
* 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 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: Company Reports, Regulatory Filings, 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 2,265.0, stands at 27.7 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 8.7 times, while the price to sales ratio stands at 4.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 24.1 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 82.4 84.7
Price to Cash Flow x 25.3 24.1
TTM P/E ratio x 27.1 27.7
Price / Book Value ratio x 11.2 8.7
Market Cap Rs m 8,498,953 8,671,531
Dividends per share (Unadj.) Rs 30.0 73.0
* 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 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 27.6% during FY20, from 27.6% 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 68 71
Interest coverage x 210.9 46.7
Debt to equity ratio x 0.0 0.0
Return on assets % 27.6 27.6
Return on equity % 35.3 38.6
Return on capital employed % 46.7 51.3
* 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 2,248.6 to Rs 2,265.0, registering a gain of Rs 16.4 or around 0.7%.

Meanwhile, the S&P BSE IT Index is trading at Rs 18,100.7 (up 0.6%). Over the last one year it has moved up from 15,638.8 to 18,100.7, a gain of 2,462 points (up 15.7%).

Overall, the S&P BSE SENSEX is up 3.7% over the year.

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

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

Harshal

Oct 2, 2020

Anual report

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