tcs final submission

8/10/2019 TCS Final Submission

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Team Members:MP13009 - Anil KumarMP13020 - Avishekh Kumar SinghMP13023 - Chandra Shekhar MishraMP13028 - Jaydeep BagchiMP13033 - Manoj Kumar


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Corporate FactsTata Consultancy Services is an IT services,consulting and business solutions organization.

Lineage & History: TCS is part of the Tata Groups. Established in 1968 as a division of Tata

Sons Ltd. Become separated entity on Jan19, 1995.

Workforce : TCShas over 300,000 of the worlds best -

trained IT consultants in 46 countries.

Financial Information: M-Cap is $87.2b , Highest in India Revenue of $13.4 billion; & Net income at $3.1B; up 22.9% Y-o-Y (fiscal

year ending March 31, 2014).


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SWOT Analysis

Increasing Employee Cost Increasing Competition fromforeign firms like Accenture,IBM

Rupee appreciation Increased competition from

low-wage countries like

China, Indonesia, etc.

Focus on SMB segment Growth in worldwide IT

Services Focus on high end business

and IT consulting Expanding operation in

countries like China

Significant Exposure to

financial services market Lack of scale inconsulting operations

Extensive Global reach

Strong financialperformance Employee Management

Skill Innovation Labs

Strength Weakness

ThreatOpportunity


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Distribution of Revenue as per geography and significant services


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Corporate Governance AnalysisStrong leadership and corporate governance have been TCS' hallmark.

TCS has 10 non-executive and one executive board (as CEO & MD) member .

Mr. Cyrus Mistry ChairmanMr. S Ramadorai Vice ChairmanProf. Clayton M christensen Director

Mr. Aman Mehta DirectorDr. Ron Sommer DirectorMr. Venkatraman Thyagarajan DirectorDr. Vijay Kelkar DirectorMr. Ishaat Hussain DirectorMr. Phiroz A Vandrevala DirectorMr. O P Bhatt Director

Leadership Team: >. N. Chandrasekharan, CEO & MD,>. Rajesh Gopinathan, CFO & VP,

>. A. Mukherjee, EVP & Head, Global Human Resource


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Mr. N Chandrasekaran, CEO & MD (w.e.f. October 6, 2009 for a period of 5 years)

Joined TCS in 1987 MCA from Regional Engineering College, Trichy, Tamil

Nadu in 1986 Bachelor of Science in Applied Science from the

Coimbatore Institute of Technology, Tamil Nadu. SRM University has conferred the Degree of Doctor of

Literature (2010) on Chandra for his pioneering andoutstanding contributions to the industry.

Salary(Rs lakh)

Benefits Perquisites andAllowances (` lakh)

Commission(` lakh)

130.76 237.54 1500

Corporate Governance Analysis


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Separate Management and ownership Registered Under BSE and NSE 62 Financial Analysts follows TCS. Strong leadership & corporate governance have been TCSs

hallmark.- Tata Code of Conduct- Memorandum & Article of Association- Corporate Governance Report- TCS Environment Policy- TCS Corporate Sustainability Report- TCS Occupational Health and Safety Policy

Corporate Governance Analysis


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TCS Sustainability initiativeThree pillars areEducation & skill building (Spent Rs 51.75 Cr.)Health (Spent Rs 30.77 Cr.)Environment (Spent Rs 11.08Cr.)

Total Spending on Corporate Social Responsibility(CSR) as

percentage of profit after tax (%): 0.48% Recruitment of differently abled people. Rural development initiatives.


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Board of Directors (Non-Executive)Non-Executive IndependentDirectors

Date of AppointmentNo. of shares held in thecompany

Mr. P. A.Vandrevala

May 13,2011 Nil

Dr. Vijay Kelkar January 5,2010 Nil

Mr. AmanMehta

May 5,2004 Nil

Mr. O.P.Bhatt April 2,2012 Nil


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Board of Directors (Non-Executives)Non-Executive IndependentDirectors Date of Appointment

Number of sharesheld in thecompany

Prof. Clayton M.Chirtsenson

January 12,2006 Nil

Dr. Ron Sommer

September 5,2006 Nil

Mr. V. Tyagarajan

September 5,2005 Nil


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Details of equity shares of the Company held bythe Directors as on March 31, 2014 are given

below:Name No. of equity shares

Mr. Cyrus Mistry 41,63,526

Mr. S. Ramadorai 1,99,120

Mr. N. Chandrasekaran 88,528

Mr. Ishaat Hussain 1,740

The voting rights of Members shall be in proportion to their shares of the paid

up equity share capital of the Company as on May 9, 2014.


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Shareholder Analysis

Total No. of Stock 195.87 Crs

No of Stock holders : 5,98,756

Stock Held by Institutional Investor: 21.48%

Listing in Foreign Market : No

Insiders Holding : No insider

Stock Held by Employees: Not Available

Approx. trading volume of TCS Stock Avg. 8,00,000 for last 30 Days


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Distribution of Category wise% of Equity Share

Category % of share

Promoters 73.69FII 16.11Insurance Companies 4.07

Indian Public and others 3.93Mutual Fund & UTI's 1.26Corporate Bodies 0.6Other Entities of the Promoters Group 0.2NRI 0.1Bank, Financial Institution 0.04Grand Total 100


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Top Ten Equity Shareholders as on 31.03.2014Name of the Shareholder % of

holdingTata Sons Limited 73.69

Life Insurance Corp. Of India 2.27

Franklin Templeton Investment Funds 1.19

Aberdeen Global Indian Equity(Mauritius) Limited 0.58Oppenheimer Developing Market Fund 0.51

Govt. Of Singapore 0.44

Vanguard Emerging Market Stock Index Fund, 0.42

Lazard Asset Management LLC 0.40

Stitchting Pension fonds ABP 0.36

National Westmininster Bank Plc as depository of first

state Asia pacific leaders

0.36


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TCS Financial Rating & Investors

TCS is rated as A by S&P on Dec13 . Default Spread : 1% Interest coverage Ratio : 4.25% No bond issued by TCS Low debt/equity ratio Average Investors : Mutual fund, Insurance company & Indian

public Marginal Investors : Tata Sons & FIIs


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Risk & Return(Risk Profile of TCS)

Return 22.56%Risk 10.46%Beta 0.50

Systematic Risk 3.84%Unsystemtic Risk 6.62%Risk Free Rate 8.50%Debt Percentage 0.26%Equity Percentage 99.74%

Cost of Debt 6.470%Cost of Equity 9.27%

Based on 6yrs. Monthly available data


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-30%

-20%

-10%

0%

10%

20%

30%

40%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40%

% c

h a n g e i n T C S r a t e

% change in Market rate

Regression Analysis on return of TCS

Series1

Linear (Series1)

Regression Eqn.:= 0.5 +1.44Intercept : 1.44Slope : 0.5r2 : 0.14


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Comparison Within IndustriesTCS Infosys Wipro HCL Tech IT Market

Return 23% 16% 11% 35% 17% 10%

Risk 10% 9% 11% 11% 8% 8%

Beta 0.50 0.39 0.67 0.70 0.50

Systematic Risk 4% 3% 5% 5% 4%

Unsystematic Risk 6% 6% 6% 6% 4%

Observations

1. TCS (23%) has outperformed the market(10%)2. Risk is more than the market risk.

3. Systematic risk is less as compared to unsystematic risk.


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Weightage Average Cost of Capital Equity 49,193Crs

Debt 127 Crs Equity Percentage (We) 99.74%

Debt Percentage(Wd) 0.26%

Effective Income Tax 0.24

Marginal Tax Rate 0.27 Cost of DebtRisk Free Rate * (1-Effective Tax Rate)Kd=8.5 * (1-0.24)

6.47%

Cost of Equity{Risk Free Rate + Beta (Market Rate Risk FreeRate)} , Ke={(8.5+0.5 * (10.06-8.5)}

9.27%

WACC = (Wd*Kd + We*Ke)={(0.26*0.017+99.74*9.27)}/100 9.28%


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Investment Return (Ratio Analysis)

19.00

20.00

21.00

22.00

23.00

24.00

25.00

26.00

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

P/E ratioP/E ratio

- 1.00 2.00 3.00 4.00 5.00

6.00 7.00 8.00 9.00

10.00

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

MV/BV RatioMV/BV Ratio

Ratio: Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Return on Equity 38.96% 36.01% 35.21% 37.01% 37.91%Return on Capital Employed 50.72% 45.86% 46.09% 44.13% 43.99%Return on Assets 28.79% 26.93% 25.42% 28.12% 30.41%WACC 9.28% 9.28% 9.28% 9.28% 9.28%Cost of Equity 9.27% 9.27% 9.27% 9.27% 9.27%

Ratio Analysis


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Economic Value Added:Economic Value Added (EVA) is a measure of a companysperformance based on its residual wealth.

EVA = Net Operating Profit after Taxes (NOPAT) (Capital * Cost ofCapital)= 14,603.00 Crs (Mar14 )

Ratio Calulation Working: Mar '14 Mar '13 Mar '12 Mar '11 Mar '10PBDIT 26,789.53 19,218.14 14,863.48 11,782.36 8,988.05Depreciation 1,349.15 1,079.92 917.94 735.26 660.89

EBIT 25,440.38 18,138.22 13,945.54 11,047.10 8,327.16 Net P/L After Minority Interest &Share Of Associates

19,163.87 13,917.31 10,413.49 9,068.04 7,000.64

Networth 49,194.76 38,645.73 29,579.23 24,504.81 18,466.72Total Debt 254.35 211.00 116.26 69.27 103.25Minority Interest 707.99 695.31 558.77 458.17 361.71Total Liabilities 50,157.10 39,552.04 30,254.26 25,032.25 18,931.68Reported Net Profit 19,331.87 14,075.69 10,523.45 9,189.79 7,092.66Total Assets 67,137.78 52,267.22 41,394.49 32,681.04 23,324.30Book Value (Rs) 251.16 196.94 150.62 124.69 93.84 Market Value (Rs) 2,128.25 1,571.80 1,167.85 1,182.50 780.80 MV/BV Ratio 8.47 7.98 7.75 9.48 8.32 WACC 9.28% 9.28% 9.28% 9.28% 9.28%EVA (Rs.) 20,785.80 14,467.79 11,137.94 8,724.11 6,570.30 Cost of Equity 9.27% 9.27% 9.27% 9.27% 9.27%

EVA (Equity) (Rs.) 14,603.52 10,334.85 7,671.50 6,796.44 5,288.78


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Finding & ConclusionsROE, ROCE & ROA are increasing over the year.ROE is more than cost of equity.Both ROCE & ROA is more than WACC.All the above indicates, that firm is selecting profitable projects .

Reason for Improvement:Better operational & financial efficiency decrease in employee &other cost.

Better risk management


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tcs final submission

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