Financial Analysis of TCS With Respect To Ratio Analysis

TCS Financial AnalysisTCS Annual Report 2014

TCS Annual Report 2014 – Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) company, a subsidiary of the Tata Group, engaged in the business of business solutions. It is the largest Indian company by market capitalization ($80 billion), the largest in Indian IT based service company by revenue (2013) and one among the top four most valuable IT services brands worldwide with the rank of the world’s 10th largest IT services provider (by revenue). In 2013, Forbes ranked TCS as the 40th overall World’s Most Innovative Companies with operation in 46 countries. Tata Consultancy Services Ltd was founded by J.R.D Tata in 1968 as a division of Tata Sons Limited. So here lets study the TCS Annual Report 2014:

The share, currently trading at Rs. 2696, touched its 52-week high Rs 2,834 and 52-week low Rs 2,160 on October 07, 2014 and  May 19, 2014, respectively.

TCS Annual Report 2014: Key Financial Ratios of Tata Consultancy Services

  March 2014 March 2013 March 2012
Profitability Ratios      
Operating Profit Margin (%) 33.29 29.54 29.30
Profit Before Interest And Tax Margin (%) 30.17 26.65 25.75
Gross Profit Margin (%) 31.62 27.88 27.52
Net Profit Margin (%) 27.25 25.24 26.42
Liquidity And Solvency Ratios      
Current Ratio 3.18 2.85 2.48
Quick Ratio 3.16 2.88 2.47
Debt Equity Ratio 0.01 0.01
Long Term Debt Equity Ratio 0.01 0.01
Management Efficiency Ratios      
Inventory Turnover Ratio 7,546.43 7,638.19 9,386.12
Debtors Turnover Ratio 5.04 4.77 5.59
Investments Turnover Ratio 7,546.43 7,638.19 9,386.12
Debt Coverage Ratios      
Interest Cover 1,006.74 513.84 816.02
Total Debt to Owners Fund 0.00 0.01 0.01
Financial Charges Coverage Ratio 1,052.90 540.06 857.98
Financial Charges Coverage Ratio Post Tax 836.35 444.80 712.23
TOTAL INCOME   (Rs in Crore) 67787.64 50656.53 41543.72
Earnings Per Share (Rs) 94.17 65.23 55.97
Book Value (Rs) 224.90 165.86 126.49

Source: MoneyControl

Why TCS Is Included In The Stock Watch?

Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global businesses, ensuring a level of certainty that no other firm can match. TCS works through a Customer-Centric Engagement Model with years of experience with a vast array of services. Their Global Network Delivery Model (GNDM) helps its client to choose the best suited business need based models irrespective of the company’s location. “GNDM” is recognized as the benchmark of excellence in software development. TCS with its ‘full service portfolio’ includes traditional IT and Remote Infrastructure with knowledge-based services like Consulting and Business Process Outsourcing.

Full Services Portfolio of TCS includes:

  • Application Development and Maintenance
  • Business Intelligence
  • Assurance Services
  • Enterprise Solutions
  • Business Process Services
  • Asset-leveraged Solutions
  • Engineering and Industrial Services
  • IT Infrastructure Services
  • Consulting

Their recent additional services include the following:

  • Mobility
  • Connected Marketing
  • Big Data
  • Social Computing
  • Cloud

As per recent news, TCS is the prime beneficiary of high growth in Europe. The company’s revenue has increased by 42% in LTM (last 12 months), much higher than its overall industry leading share of 33%. TCS invested in Europe ahead of its peers with SITAR (Swedish Indian IT Resources AB) and strengthened its presence with the recent acquisition of French IT Services firm ALTI for € 75 million (in July 2013) to help drive long-term growth in France. ALTI SA, is a privately-held company with revenues of €126 million in 2012.  ALTI SA is regarded as one of the top 5 system integrators of SAP solutions (Systems Applications and Products.) in France. TCS struck the deal for 75 million euros (about Rs 533crore) in an all-cash deal for the acquisition of 100% equity shares in Alti SA to help transform TCS into a major player in France — the third-largest IT services market in Europe.

On January 15, 2015, the company reported a 5.1% rise in quarterly net profit, and said it expected strong outsourcing deals momentum to boost growth in the quarters ahead as the European clients increased tech spending in a seasonally weak quarter. Presently, Tata Consultancy Services (TCS) Ltd, is the India’s biggest software services exporter.

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