8/14/2019 Tata Cunsultancy Services-Performance Analysis

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TATA CUNSULTANCYSERVICES

For the fast reach of services to everywere, every country need to have sound ITinfrastructure. IT industry contributes 5.8% of our GDP which is expected to grow at a

CAGR of 12% for the next five year. India has low computer penetration and large pool of

skilled based people. Indian IT industry is fastest growing industry, will have 12% of totalmarket share by 2013.

TCS wants to repeat NANO story in software business, as it is targeting 8Million

small & medium sector enterprises (SMEs), scaling up its IT-As-A-service to increase

market share. Given increasing business of SaaS, PaaS & IaaS coupled withadvantage cloud computing to SMEs, TCS is expected to have better industry share.

TCS has high level of customer satisfaction it uses Global Network Delivery

Model (GNDM) which allows company to provide reliable and cost effective delivery ofservices and solutions. It is also looking for new markets like Singapore, Malaysia,

Australia, and New Zeeland etc.

Gross margin improvement, to 27.52% in OND FY2010 from 25.25% in JAS

FY2010, happens because of a process. It did not merely registered growth by sellingservices; it has also implemented necessary cost management techniques. TCS is also able

to increase its employee utilization ratio from 79.5% in JAS FY2010 to 81.1% in OND

FY2010.

On 17th June 2009 TCS has issued bonus share in the ratio 1:1.

P/E is short for the ratio of a company's share price to its per-share earnings. The mostcommon measure of how expensive a stock is. Although a simple indicator to calculate, the

P/E is actually quite difficult to interpret. P/E ratio tells us about P/E ratio shows the

aggressiveness of the company. Higher the growth rates higher the P/E ratio. TCS wasworst affected during global recession because its most revenue comes from Americas

Nation and its dependency on these nations. Rising Rupee in 2007 posses challenge to TCS

in 2007 it fell about 15% in 2007, whereas 2008-09 was worst as it decreased about 45%due high dependency on Americas Nations which has huge by Sub-prime crisis. In last sixit has given a return of about 50%. It also affected by depreciation in INR. As TCS started

picking up its growth, P/E ratio started rising. The movement of P/E ration also tells about

undervalued or overvalued stock. TCS has outperformed all its competitors; it has given areturn of 18.64% over the 3 months ending December 2009.

Sales Net P rofit EPS

2007 14,939.97 3,757.29 38.39

2008 18,533.72 4,508.76 46.07

2009 22,404.00 4,696.21 47.91

Source: BSE Rs. In Crore

Price Trend & P/E Movement

300

800

1300

1800

Jan-07 Jan-08 Jan-09 Jan-10

%

-7

3

13

23

33

Multiple

Price(LHS) P/E Ratio(RHS)

TCS Performance of last 3 Years