TCS 2022-23 Annual Report Analysis

Mon, 17 Apr

TCS has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

TCS Income Statement Analysis

• Operating income during the year rose 17.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 11.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 26.2% in FY23 as against 27.7% in FY22.
• Depreciation charges increased by 9.1% and finance costs decreased by 0.6% YoY, respectively.
• Other income declined by 10.4% YoY.
• Net profit for the year grew by 10.0% YoY.
• Net profit margins during the year declined from 20.1% in FY22 to 18.8% in FY23.

TCS Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	1,917,540	2,254,580	17.6%
Other income	Rs m	40,270	36,100	-10.4%
Total Revenues	Rs m	1,957,810	2,290,680	17.0%
Gross profit	Rs m	530,480	590,980	11.4%
Depreciation	Rs m	46,040	50,220	9.1%
Interest	Rs m	7,840	7,790	-0.6%
Profit before tax	Rs m	516,870	569,070	10.1%
Tax	Rs m	132,380	146,040	10.3%
Profit after tax	Rs m	384,490	423,030	10.0%
Gross profit margin	%	27.7	26.2
Effective tax rate	%	25.6	25.7
Net profit margin	%	20.1	18.8

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TCS Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 436 billion as compared to Rs 424 billion in FY22, thereby witnessing an increase of 2.8%.
• Current assets rose 2% and stood at Rs 1,103 billion, while fixed assets rose 2% and stood at Rs 301 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,403 billion as against Rs 1,378 billion during FY22, thereby witnessing a growth of 2%.

TCS Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	891,390	904,240	1.4
Current Liabilities	Rs m	423,510	435,580	2.8
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	1,378,060	1,403,440	1.8
Current assets	Rs m	1,083,100	1,102,700	1.8
Fixed Assets	Rs m	294,960	300,740	2.0
Total Assets	Rs m	1,378,060	1,403,440	1.8

TCS Cash Flow Statement Analysis

• TCS's cash flow from operating activities (CFO) during FY23 stood at Rs 420 billion, an improvement of 5.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 390 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -479 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -54 billion from the Rs 56 billion net cash flows seen during FY22.

TCS Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	399,490	419,650	5.0%
Cash Flow from Investing Activities	Rs m	-8,970	390	-
Cash Flow from Financing Activities	Rs m	-335,810	-478,780	-
Net Cash Flow	Rs m	56,300	-53,650	-

Current Valuations for TCS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 115.6, an improvement from the EPS of Rs 105.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 3,139.6, stands at 27.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 12.7 times, while the price to sales ratio stands at 5.1 times.
• The company's price to cash flow (P/CF) ratio stood at 26.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	524.1	616.2
TTM Earnings per share	Rs	105.1	115.6
Diluted earnings per share	Rs	105.1	115.6
Price to Cash Flow	x	31.8	26.1
TTM P/E ratio	x	35.6	27.2
Price / Book Value ratio	x	14.5	13.7
Market Cap	Rs m	12,898,705	12,370,338
Dividends per share (Unadj.)	Rs	43.0	91.0

Ratio Analysis for TCS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.5x during FY23, from 2.6x during FY22. 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 improved and stood at 74.1x during FY23, from 66.9x during FY22. 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 46.8% during FY23, from 43.1% during FY23. 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 63.8% during FY23, from 58.9% during FY22. 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 30.7% during FY23, from 28.5% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	2.6	2.5
Debtors’ Days	Days	8	8
Interest coverage	x	66.9	74.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	28.5	30.7
Return on equity	%	43.1	46.8
Return on capital employed	%	58.9	63.8

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 0.0 to Rs 3,139.6, registering a gain of Rs 3,139.6 or around 0.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,887.7 (down 4.8%). Over the last one year it has moved up from 0.0 to 26,887.7, a gain of 26,888 points (up 0.0%).

Overall, the S&P BSE SENSEX is up 2.7% over the year.

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

Read: Latest Annual Report Analysis of TCS