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GROUP  –  2

CIA - 3

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TCS

Section -1

Background:

Tata Consultancy Services was founded in 1968 by JRD Tata. It is headquartered in Mumbai with Ratan

Tata as its chairman. One of its first contracts was to provide punched card services to sister company TataSteel (then TISCO). It is listed on the Bombay Stock Exchange and the National Stock Exchange of India

and is a subsidiary of the Tata Group conglomerate. It has service revenue of US$ 10.17 billion and a profit

of US$ 2.2 billion.

TCS is a leader in the global marketplace and among the top 10 technology firms in the world. It has more

than 40 years of experience and adds real value to global organizations through domain expertise plus

solutions with proven success in the field and world-class service. It is the  largest India-based IT services

firms. 

With around 238,600 employees TCS is one of the largest private sector employers in India and the second-

largest employer among listed Indian companies .TCS has one of the lowest  attrition rates in the Indian IT

industry.

Products: 

TCS offers products in basically 2 domains:

Services: It provides IT consulting services in almost every vertical with BFS (business financial sector) being its major

revenue sector.

Software: It has different software Technology, Knowledge, Engineering, Healthcare and banking products

.Market share 

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Top 10 IT companies in India commands over 95% market share of Indian IT Services Industry (Softwareexcluding hardware)Top 5 IT companies commands over 80% market share of Indian software industry.

TCS enjoys 25% while Infosys has 18% market share.

Corporate Overview 

Tata Consultancy Services Limited (TCS) is an IT services, business solutions and outsourcing organizationthat delivers real results to global businesses, ensuring an unmatched level of certainty. TCS offers aconsulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global

 Network Delivery Model™ (GNDM™). 

The Growth Opportunity 

TCS operates in a large, growing global market for IT and IT-enabled services. Globally, organizations arespending more on IT as new technologies emerge, offering unique opportunities to gain a competitiveadvantage. Moreover, industries and geographies that lagged behind others in leveraging technology arenow catching up. Further, the proportion of IT services budgets that is spent on external providers is goingup as the shelf-life of technologies is reducing and corporations are looking for greater efficiency andvariability in their costs. With a minuscule market share in this growing market, there is much headroom forTCS‟ longer -term growth.

Strategy for Longer-Term Growth 

TCS‟ strategy for longer -term growth is to continually extend the core IT services business by expanding itsgeographic reach, industry coverage and service capabilities and deepening existing client relationships,

 building or acquiring emerging businesses and adopting or creating new business models and businesssolutions through continuous innovation.

Key elements of this strategy are summarized here:

Customer-centricity Full Services Capability Global Network Delivery Model™ (GNDM™) Strategic Acquisitions Non-linear Business Models 

Customer-centricity:  We seek to build, nurture and deepen customer relationships so we are trustedstrategic partners to our customers. Our industry-segmented, customer-centric organization is an important

enabler that has ensured high levels of accountability, superior customer service and intimacy.

Full Services Capability: TCS has been investing in building a comprehensive, integrated portfolio ofservices to capture the entire value chain of IT, presenting a compelling value proposition for globalenterprises making us a one-stop shop for many key clients, significantly deepening the relationship and

 boosting our share of the wallet.

Global Network Delivery Model™ (GNDM™): TCS' GNDM™ lets us seamlessly and uniformly deliver

services to global customers from multiple locations across India, China, Europe, North America and LatinAmerica. Teams separated by time zones collaborate on projects, leveraging all of TCS' assets whilesubscribing to one global service standard. It uses multiple levers of time zone, language, skills and local

 business knowledge to deliver high quality business solutions seamlessly across the globe, using a globallyconnected workforce, integrated delivery processes and multi-tiered infrastructure. This model developed byTCS is now recognized as the benchmark of excellence in software development. For large clients

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expanding beyond their home markets, the scale and depth of our GNDM™ capability makes us their

 preferred strategic partner.

Strategic Acquisitions: While primarily focusing on organic growth, TCS is also open to selective strategicacquisitions in order to penetrate select markets, strengthen verticals and enhance service offerings.

Non-linear Business Models: TCS has been building non-linear growth businesses that can enable revenuegrowth without commensurate headcount growth. Non-linearity in the existing businesses comes from

 productivity-enhancing tools, frameworks, solution accelerators and managed services engagements.

In addition, TCS is pursuing three strategic initiatives for non-linear growth:

Software Products (Asset Leveraged Solutions)Platform-based BPO services (Process Clouds)iON –  an IT-as-a-service solution for small and medium business

Shareholding pattern- holding company and its subsidiaries and associates :

 Equity shares - 2013-14

ParticularsAmount in

(Rs.Crores)

Holding Company

Equity shares value held by Tata Sons Limited 144.35

Subsidiaries and associates of Holding Company

Equity shares value held by Tata Industries Limited 0.10

Equity shares value held by Tata Investment Corporation Limited 0.06

Equity shares value held by Tata International Limited 0.01

Total 144.52

Company’s performance – Overview

For the financial year ended March 31, 2014, the Company has recorded a strong revenue and margin performance. There was holistic growth across markets and industries during the financial year. Europe ledthe growth in major markets, while UK and North America continued to grow in line with the Companyaverage. All major industry verticals grew in double digits led by retail, manufacturing, life sciences &healthcare and Banking, financial services and insurance during the year. The Company‟s full services

capabilities continue to be leveraged by customers with new service lines growing at a fast pace led byconsulting, assurance services, infrastructure services and engineering & industrial solutions.

Summary of Financial performance :

Revenue :

Revenue of the Company aggregated Rs. 81,809.36 crores in fiscal 2014 (Rs.62,989.48 crores in fiscal2013), registering a growth of 29.88%. In terms of US Dollars, the revenue in fiscal 2014 was 13.44 billion(11.57 billion in fiscal 2013).

Earnings before interest, Tax and depreciation and amortisation :The Earnings before interest, Tax and depreciation and amortisation (EBITDA) excluding other incomeaggregated Rs. 25,152.79 crores in fiscal 2014(Rs. 18,039.91 crores in fiscal 2013) –  a growth of39.43%.

Profit before tax :

The Profit before tax aggregated Rs.25,401.86 Crores in fiscal 2014 (Rs. 18,089.73 crores in fiscal 2013) –  a growth of 40.42%.

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Net profit after tax :

The Net profit after tax (PAT) for fiscal 2014 aggregated Rs.19,163.87 crores (Rs. 13,917.31 crores infiscal 2013) –  a growth of 37.70%.

Dividend on Equity Shares:Dividend (interim as well as proposed) on equity shares and tax thereon for the fiscal 2014 aggregated Rs.7,058.12 crores (Rs. 5,029.99 crores in fiscal 2013).

Consolidated Earnings Per share :

The Consolidated Earnings Per share (EPS) was Rs.97.67 in fiscal 2014 (Rs. 70.99 in fiscal 2013)  –   agrowth of 37.58%.

Key Ratios – Indicators of growth :

ParticularsFY

2013-14

FY

2012-13

FY

2011-12

FY

2010-11

FY

2009-10

Revenue 29.88% 28.83% 31.00% 24.30% 7.97%

EBIDTA (before other income) 39.43% 24.97% 29.14% 28.57% 21.27%

Profit after tax 37.70% 33.65% 14.84% 29.53% 33.18%

SECTION –  2

Significant Investment Decisions and its likely impact on Business:

The Major investment decision of TCS in 2011-12 are given below:

1)  Moving from linear growth to non-linear growth model

The productivity of the company increases and revenue growth will not be linear to the head

count.

Benefit : Since the global recession the demand for the BPO and IT services are weak, so TCS

started providing different delivering models such as outcome-based pricing, risk-reward and

fixed price models.

It helps in increasing its operating profit as the head count decreases and revenue increases it will

reduces the expense and increases the revenue.

2)  Brand Building

The brand promise of „experience certainty‟ to its clients. Invested in digital space using

 premium business and technology channels through focused branded properties and

sponsorships.

Benefit : TCS the brand promise internally, using various channels and internal marketing

assets and leveraged them to activate the brand amongst employees as well as other importantstake holders.

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It helps to keep company investors, employees to be confident. Increases its reliability among

stake holders and helps in reducing attrition rate.

3)  Technology and Innovation

TCS invest in futuristic areas related to banking, healthcare engineering etc. through

Company‟s Co-Innovation Network (COIN). Its tools are used to provide end to end

execution of projects.

Benefit: Helps to provide quality and efficiency of current offerings, customer focusedtechnology initiatives have helped its customers prepare for future challenges. Tools helps inclients operational efficiency, manage risk, work with smart frameworks, simplify complexIT infrastructure, collaborate better with their customers.

It helps in client retention, providing complete suite can improve their revenue and increasesits customer base. 

4)   New software products

The Company‟s current product portfolio largely consists of the highly successful TCS

BαNCS suite covering the financial services value chain. It is looking forward to replicate its success with Telecom, retail and also in by bringing LMS(legal management systems).

Benefit: TCS can penetrate deep into the other verticals in the market. Most of its clients areexpanding their growths in different verticals, which helps them use TCS new software

 products.

5)  Big Data

TCS is working on creating niche analytical business solutions using Big Data, for customerspecific c problems that are not solved easily using traditional architectures. Invested in

 building a highly skilled team and state of the art Big Data infrastructure.

Benefit : To help customers utilise the burgeoning volume, variety and velocity of data (BigData) and create value for all stakeholders.

6)  Human Resource Strategy

Diversified Human resources from top engineering and management institution across Indiaare hired. The strategic initiative to recruit, integrate and retain a diverse workforce in the“One TCS” culture and build a competency-driven organisation has helped it retain itsleadership position.Leadership programmes, talent development and competency development of the employees

Benefit : Talent retention. Retention rate decreased from 2010-11.

7)  TCS financial solutionsTCS one of the highest revenue generating vertical is Financial solutions through its best-in-class portfolio of business application solutions marketed under the brand of TCS BαNCS. 

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Benefit : TCS financial solutions increased its substantive customer base by adding 39 newclients during fiscal 2012. In addition, 14 clients went “live” on TCS BαNCS solutions

during fiscal 2012.

8)  Risk Management

The Company has put in place an Enterprise-wide Risk Management (ERM) programme based on the Committee of Sponsoring Organisations of the Treadway Commission (COSO)framework.

Benefit : ERM programme identify the problems ,strategizes and mitigate the problems withthe solutions.

9)  Eco-sustainability services 

The eco-sustainability services unit has been set up by TCS to leverage opportunities that are arising.The engagements of the Company have been focused in the areas encompassing sustainabilityconsulting and IT systems leverage for driving the agenda.

Benefit : Recognising the need and are integrating eco-sustainability into their business strategies toaddress growth and innovation, profi tability, and risk to brand and reputation.

Major Investments by TCS in 2012-13:

1)  Experience certainty

TCS‟ brand promise to its customers, is based on the core principles of „results, leadership, and

 partnership‟. TCS helps customers experience certainty by reliably delivering business results,

 providing leadership to drive transformation and partnering for success. Experience certainty is partof our culture of commitment and is ingrained in the customer-centric behaviour of our associates.

Benefit : Experience certainty is backed by a strong set of metrics that the Company monitors formeeting quality parameters of delivery and relationship. TCS‟ „Delivery Excellence Group‟

continuously refines delivery processes and helps the Company to stay ahead of global quality

standards.

2)  Digital Technologies

Adoption of digital technologies is a top priority among all enterprises, across industries andgeographies. TCS has significantly invested in digital technologies –  mobile, cloud, big data,analytics and social media. While,individually all of these technologies are influencing the way

 business operates and interacts with consumers, their real power lies in the „combination of digital

forces‟. A real time analysis of consumer behaviour, delivered on a mobile device through cloud

services has the biggest potential to support business in taking right decisions in real-time.

Benefit : The Company envisions tremendous growth potential in digital technologies and iscommitted to continue investing in this area to drive long-term growth. The Company is also making

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initial investments in new emerging technologies like production automation and high performancecomputing, which have great future potential.

3)  Opportunities and Risk

Under there ERM programme TCS added opportunities to grab along with finding risks.

Strategic acquisition: 

During the financial year 2013-14, the Company through its subsidiary Tata Consultancy Services Netherlands BV(TCS

 Netherlands BV), acquired French IT services company Alti S.A. (Alti), regarded as one of the top five system integrator

companies in France with leading French corporations in the banking, financial services & insurance, energy & utilities,

retail & CPG, manufacturing and life science sectors as its key customers. Alti‟s acquisition has strengthened TCS‟ ability

and footprint to service its customers in France and other regions, leveraging its strong talent pool. The acquisition has also

 brought its seven subsidiaries namely, Planaxis Technologies Inc. ,Alti HR S.A.S., Alti Infrastructures Systems & Reseaux

S.A.S., Alti NV, TESCOM (France) Software Systems Testing S.A.R.L., Alti Switzerland S.A. and Team link into TCS‟

fold. During the financial year, TCS has announced that a joint venture (JV) would be formed in Saudi Arabia by TCS

 Netherlands BV and GE. The JV will be the first all-women business process service centre in Saudi Arabia.

Growth Strategy:

The Company‟s strategy for long-term growth is based on continuing to scale, strengthen core business and grow in new

areas of business. The Company has a matured set of elements of strategy, which have evolved over time. While the core

elements of strategy continue to remain same, there is a structured attempt by the Company to look for new dimensions of

growth within these elements.

Key elements of the Company’s growth strategy:

 Customer Centricity

  Full services Portfolio

  Global Network Delivery Model

   Non Liner Business Model

  Experience Certainty

The Company continues to look for new ways to strengthen customer relationships, expand services portfolio by

continuously introducing new services, expand global infrastructure by opening up new delivery centers in new countries,

launching new products and platforms and continuously improving quality processes to raise the delivery promise to

customers. The Company believes in strong focus on execution of strategy to deliver long-term growth.

Human resources strategy:

The human resources strategy enabled the Company to attract, integrate, develop and retain the best talent to deliver

 business growth. The relentless drive to create „ONE TCS‟ culture across the organisation helped the Company integrate its

diverse global talent base into a high performing cohesive unit.

In FY14, the Company hired and integrated 61,200 people into its workforce across the globe. The Company today employs

300,464 associates representing 118 nationalities deployed across 55 countries.

Mature HR processes enables the Company to be agile, responsive to the dynamic global environment and stay relevant to

its customers. The robust HR systems and sound execution of strategy ensure that the Company is able to manage the

complexities associated with this scale and geographic spread, and remain compliant with the regulatory requirements in the

countries where it operates.

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SECTION –  3

Finance Mix

Total Debt of TCS from past 5 years

Source : http://markets.ft.com/research/Markets/Tearsheets/Financials?s=TCS:NSI  

Year2013-2014 2012-2013 2011- 2012 2010 - 2011 2009 - 2010

Long Term Debt / Equity 0.00 0.01 0.00 0.00 0. 10

Source : annual report under ratio analysis

Year 2013-2014 2012-2013 2011- 2012 2010 - 2011 2009 - 2010

Equity

Share

Capital

195.87  195.72  195.72 195.72 195.72

The Company issued 15,06,983 equity shares to the minority shareholders of TCS e-serve Limited, asubsidiarywhich has been merged during fiscal 2014. The authorised share capital was increased to 420,05,00,000equity shares of 1 each.

0

0.5

1

1.5

2

2.5

3

3.5

2010 2011 2012 2013 2014

   D  e   b   t   i  n

   b   i   l   l   i  o  n

Debt at the fiscal year end

Debt in Billion

Period Instrument Authorized Issued Capital - P A I D U P -

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Source : http://www.moneycontrol.com/financials/tataconsultancyservices/capital-structure/TCS  

On Dec 04 2012 CCI gives approval for restructuring of two TCS entities.Shares of 15,06,983 are issued in fiscal 2014.The Competition Commission has approved the restructuring of the two subsidiaries of country's largestsoftware exporter Tata Consultancy Services. The restructuring pertains to two entities -- e-Serve and TEIL.

Source : http://www.moneycontrol.com/news/business/cci-gives-approval-for-restructuringtwo-tcs-

entities_790178.html?utm_source=ref_article  .

TCS planned to raise Rs4,000 crore via a commercial paper (CP) programme from domestic investors.Commercial paper is a short-term debt raising instrument of 1 month to 12 months‟ maturity. Companies use

the instrument to raise money for their immediate liquidity needs.Rating agency ICRA has assigned an A1+ long-term stable outlook rating to TCS‟ commercial paper

 programme.

At close of trading hours on Friday, TCS shares were up 0.40% at Rs2,604.95, while the benchmark BSEclosed down 0.55% at 26, 126.75 points on July 25 2014.

TCS held liquid cash of Rs 25,943 crore as of June 30. But after the first quarter results of FY15, thecompany had announced an additional dividend of Rs 40 a share for shareholders. This means a total outgoof Rs 8,813 crore in the quarter against a total payout of Rs 6,296 crore in 2013-14.

Analysts say TCS‟s total dividend outgo in 2014-15 is likely to cross Rs 11,500 crore, given its policy of paying quarterly dividends. Historically, the company pays a constant interim dividend every quarter andtops it up with a higher final payout in the fourth quarter.

A treasury executive with a private bank said, “It is cheaper for an IT company to raise money throughcommercial paper than external commercial borrowings (ECB). At present 90-day commercial paper attracts

a rate of 8.5 per cent while the total cost of ECB is much higher. TCS is seen as well-managed andconservative so there is demand for its paper.”  

Sources : http://www.livemint.com/Companies/bybeG4U0R5odheRawTHofI/TCS-to-raise-Rs4000-crore-via-commercial-paper.html?utm_source=copy  http://www.business-standard.com/article/company/tcs-raising-rs-4-000-crore-via-commercial-paper-114072501066_1.html 

Capital

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capital

2013 2014 Equity Share 420.05 195.87 1958727979 1 195.87

2012 2013 Equity Share 225 195.72 1957220996 1 195.72

2011 2012 Equity Share 225 195.72 1957220996 1 195.72

2010 2011 Equity Share 225 195.72 1957220996 1 195.72

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SECTION –  4

Working Capital

TCS growth has been financed largely by cash generated from operations. It has sufficient cash generatedfrom operations for meeting its working capital requirements as well as the requirements for capitalexpenditure.

In fiscal 2014,an additional amount of ` 3,450.79 crores (` 1,766.54 crores in fiscal 2013) was used inworking capital to meet the expanding business requirements.Working capital ratio, anything below 1 indicates negative W/C (working capital). While anything over 2means that the company is not investing excess assets. Most believe that a ratio between 1.2 and 2.0 issufficient. 

  If the ratio is less than one then they have negative working capital.

  A high working capital ratio isn't always a good thing, it could indicate that they have too much

inventory or they are not investing their excess cash.

CurrentAssets/Year

2013-2014 2012-2013 2011- 2012 2010 - 2011

Cash and bank balances

12566.26 4054.16 3280.07 3120.52

Inventories 8.57 6.34 4.14 5.37

Trade

receivables

14471.89 11202.32 9107.72 4806.67

Short - termloans andadvances

3688.12 4733.38 1649.74 1369.05

Other currentassets

740.02 682.34 388.41 94.92

Total 31474.86 20678.54 14430.08 9396.53

Current

Liabilities /Year

2014 2013 2012 2011

Trade payables

3977.55 3349.94 2847.91 2153.38

Short - term borrowings

0 80.02 0 0

Short - term provisions

5827.83 3896.14 4389.01 2413.94

Othercurrentliabilities

2460.32 2172.71 1598.56 1584.27

Total 12265.7 9426.81 8835.48 6151.59Working

capital ratio

2.56 2.19 1.63 1.53

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ANALYSIS

From the above table we can infer that TCS has increased its working capital ratio which was 1.53 in 2011which was quite sufficient to 1.63 in 2012. Then the companys working capital ratio increased to above 2which is actually considered as bad for any company the reason being cash or inventory which is held upand it does not generate any kind of revenue for the company if the company looks at the alternatives ofinvestments and invests in some other alternative which would have generated them a income they are notlooking into the opportunity costs and losing out on maximising their revenue.

Performance of the company

Performanceindicator/year

2013-2014 2012-2013 2011- 2012 2010 - 2011

Revenue growth 29.9% 29% 31% 24.3%

EBITA growth 39.4% 25% 29% 29.9%

 Net Profit

growth

37.7% 34% 15% 29.5%

WorkingCapital/Sales(x)

2.87 3.5 4.95 6.63

Source: http://money.livemint.com/IID64/F132540/Financial/Ratios/Company.aspx

SECTION 5 - Dividend

2014 2013 2012 2011

2010

Dividend Per Share 32.00 22.00 25.00 14.00 20.00

Dividend Yield % 1.50 1.40 2.14 1.18 2.56

Dividend Pay-out Ratio Net Profit 33.97 33.72 44.66 36.24 69.88

Reported Net Profit 18,474.92 12,786.34 10,975.98 7,569.99 5,618.51

The last bonus that Tata Consultancy Services had announced was in 2009 in the ratio of 1:1.The share has been

quoting ex-bonus from June 16, 2009.

Tata Consultancy Services has not split the face value of the share so far.

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 ANALYSIS

2010- The company paid a dividend of Rs 20 in 2010 per share when they had a reported profit of 5618.51

crores they paid out almost 70% of the profits retaining only a mere 30% in that year. The dividend yield forthat particular year was 2.56 which shows investors gained a return of 2.58 as dividend for every 100 Rsinvested in the company.

2011- In the next year TCS reported a growth of 34.73 % as compared to 2010 the reason being demand

from customers in developed markets like USA, Europe and Australia continued to recover as did growthfrom the emerging markets of Asia-Pacific and India. From the last 12 months, they added 140 newcustomers being the reason for the double digit growth that they had witnessed. The company in spite ofmaking such huge profits did not pay huge dividends to the shareholders they decided on paying 36% of the

 profits while retaining the rest i.e. 64%. One of the reasons might be that TCS continues to invest in buildingworld-class, intelligent campuses in India and overseas. They had initiated plans to build a new 10,000-seater Learning Centre in Trivandrum.

2012- In the year 2012 TCS made a profit of 10675 crores which shows that the growth had fallen from34% to 15% they have continued to consistently reward their shareholders with a higher dividend. This year

their dividend pay-out is Rs.25 per share including 8 proposed as final dividend and 8 proposed as special

dividend. The earnings per share for the Company increased to Rs. 53.07. New service lines like

Infrastructure Services, BPO and Enterprise Solutions gained global scale during the year with each service

line clocking more than $ 1 billion in annual revenues. All other service lines also performed admirably with

each growing by double digits. In the last 12 months TCS added 141 new customers across the world to take

its active customer base to 1076. The movement of customers across each revenue band from $1 million

onwards has been very positive, including growing the number of $100 million customers to fourteen from

eight in the previous year.

2013- In the year 2013 the company reported a profit of Rs. 12786 crore which is a 20% growth as when

compared to the last year The EPS per share of the company increased from 53.07 to 70.99 in the year 2013.

The company paid a dividend of Rs 22 to the share-holders by retaining 66% of the net profits and giving

out 34% of it. The company added 80 new customers to its client base making it a total of 1156. Even

though there was a economic slowdown the company still managed to pull a 20% growth in its profits in

2013.

2014- In this year the company made a whooping profit of 18474 crores which shows a huge growth percentage of 44% where-by they doubled the growth as compared to last year in this particular year the

company paid a dividend of Rs 32. Which is the highest dividend pay till now the company paid 34% of its

earnings while retaining 66% of it for future growth and expansion. It consolidated the big 4 position and it

was the fastest growing IT company in the world.

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Section 6

Outsourcing giant Tata Consultancy Services (TCS) crossed the Rs 5 lakh crore mark in market

capitalization on Wednesday, becoming the second most valuable IT services company in the world ahead

of Ireland's Accenture but behind US's IBM.

TCS's market valuation rose to Rs 5,03,148 crore (about $84 billion), the highest since its listing l0 years

ago, sprinting miles ahead of Accenture's $51 billion, but way behind the leader IBM's $193.7 billion.

TCS's record market cap, the first Indian company to achieve the feat, is bigger than the combined market

cap of the other four domestic IT players in the pecking order like Infosys($31.7 billion), Wipro ($23.3

 billion), HCL Technologies ($17.9 billion) and Tech Mahindra ($8.5 billion).

The software services firm's market cap is also bigger than the combined market cap of the other 31-listed

Tata group companies' $57.2 billion. TCS is followed by ONGC ($57.63 billion), Reliance Industries($55.53 billion) and ITC ($46.62 billion) in the rankings.

Analysts attribute TCS' superior market valuation to its outstanding financial performance, outpacing peers

in the sector. TCS, which gets more than three-quarters of its revenues from US, is one of the most

expensive IT services stocks in the world, with its market cap more than six times its revenues and 28 times

its net profits in FY14. A higher market cap would help in attracting top-notch investors and boost TCS'

global profile, with its brand value rising three fold to $8.2 billion in FY14. 

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Comparison with Benchmarks

When we compare TCS along with Sensex we can infer the following points:-

1.  We can see a 2% change in the share price of TCS whereas the % change in Sensex is a negative

21.22 % which shows even if the market as a whole was falling in 2011 the company still managedto keep its share price afloat

2.  In 2012 we see a 18% increase in the share price of TCS whereas the Sensex market price grew by

19% the change noted is quite similar to what the market was going through.

3.  In 2013 we can see that the company‟s share price grew by a whopping 54% as when compared to

2012 but the market grew only by a mere 8%.

4.  In 2014 TCS market share again grew by 31 % but the sensex share grew by a whopping 38% which

is the all-time high till date.

Comparison Results

Price Date

TCS

(Rs.)

Sensex

(Nos.)

BSE IT

(Nos.)

Nifty

(Nos.)

CNX IT

(Nos.)

11/28/2014 2643 28693.99 11207.45 8588.25 11898.0511/29/2013 2004.35 20791.93 8414.25 6176.1 8820.75

11/29/2012 1298.1 19170.91 5855.86 5825 6226.6

11/29/2011 1093.3 16008.34 5463.9 4805.1 5854.2

11/29/2010 1071.3 19405.1 6081.07 5830 6688.9

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Peer comparison with respect to share price for past 5 years

Peer Comparison Results

Price Date

TCS

(Rs.)

Infosys

(Rs.)

Wipro

(Rs.)

HCL

(Rs.)

Accenture

(US$)

IBM

(US$)

11/26/2014 2627.3 4300.45 579.8 1633.15 85.15 161.95

11/26/2013 1993.7 3316.2 474.9 1059.75 77.37 177.31

11/26/2012 1293.7 2417.4 375.45 639.95 67.67 192.88

11/28/2011 1088.5 2636.15 372.05 390.25 55.29 182.21

11/26/2010 1047.25 3042.05 407.5 392 43.84 143.9

11/27/2009 670.45 2327.85 373.56 330.95 40.51 125.7

Peer comparison with respect to Financials

Name Last Price Market Cap.

(Rs. cr.) 

Sales

Turnover

Net Profit Total Assets

TCS   2,643.00 517,691.80 64,672.93 18,474.92 44,141.57

Infosys 4,359.85 250,358.35 44,341.00 10,194.00 42,092.00

Wipro 585.80 144,604.52 39,133.30 7,387.40 33,866.20

HCL Tech   1,662.35 116,633.91 16,497.37 5,984.62 15,809.96

Tech Mahindra 2,640.05 62,198.40 16,295.13 2,685.47 9,825.50

Oracle Fin Serv 3,345.15 28,294.94 3,159.47 1,148.36 8,455.27

Mindtree  1,199.45 10,046.12 3,031.60 451.20 1,643.60

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1.  TCS is expected to continue to show strong revenue growth. TCS‟ CAGR in the past three years

leading to FY13 was 22% compared with 13% for Infosys and 10% for Wipro. However, TCS

substantially lags behind IBM in revenues and trails Accenture too.

2.  TCS‟ stock commands a huge premium, trading at around 27 times its profits of the past 12 months,

a five-year high, whereas rival IBM trades at 12 times and Accenture trades at 17 times its latest

earnings per share. Its share price has spiked over 40% in the past three months. 

3.  While TCS had a revenue and profit after tax of Rs 48,426 crore and Rs 12,786 crore respectively for

the year ended March 2013, the aggregate revenue and PAT for the four companies stood at Rs

8,88,00 crore and Rs 19,122 crore which is significantly higher than TCS.

4. TCS, however, has emerged as the biggest beneficiary at the stock markets among the five IT

majors. Since May 2013, while TCS has witnessed a jump in its share prices by 48.8 per cent,

Infosys and Wipro gained 37.7 and 39 per cent respectively. HCL Tech and Tech Mahindra too rose

 by 43.8 and 44 per cent respectively. 

Analysis-

TCS has had a dream run in the last five years. Its share price grew from Rs 780 in March 2010, when the world was still

recovering from its worst financial crisis, to Rs 2,128 as of March , 2013.

The stock market surge is backed by the company‟s performance: Its sales have grown; its profits are up; its profit margins

have improved. [1]

 

Year Wise-

2009-2010

Overall, 2009-10 has been a very satisfying year. TCS emerged stronger out of the global economic downturn as it stayed

close to its customers and helped them in the recovery process. The Company was aggressive in its quest for new contracts,

executed on its full services strategy and maintained pricing discipline. This helped to deliver 8% revenue growth for theyear along with improvement in margin. [2]

Based on the Company‟s performance, the Directors are pleased to recommend for approval of the members a final

dividend of Rs.4/- per share and a special dividend of Rs.10/- per share for 2009-10 on the enhanced capital of

1,95,72,20,996 Equity Shares of Re.1/- each. [2]

Strategic Acquisitions and Alliances

TCS e-Serve Limited, TCS‟ acquisition of Citigroup‟s captive BPO operations in India, posted a good performance in 2009-

10. TCS e-Serve recorded revenues of Rs.1517.78 crore on a consolidated basis, an increase of 19.31% over previous year‟s

revenues of Rs.1272.12 crore.

2010-11

Financial Year 2010-11 marked a strong resurgence in volume and demand growth post the financial crisis. This growth

was led by developed markets of the United States and Europe with strong contributions from Asia Pacific, Middle East and

Africa and was secular across all industries and markets. The second half of the year also witnessed an uptick in pricing for

the first time since September 2008. The Company has registered strong broad based sequential growth across all key

markets and customer segments. [3]

Based on the Company‟s performance, the Directors were pleased to recommend for approval of the members a final

dividend of ` 8 per share for the year 2010-11 taking the total dividend to ` 14 per share (previous year ` 10 per share

excluding special dividend of ` 10 per share) on the capital of 195,72,20,996 Equity Shares of ` 1 each.[3]

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Strategic Alliance and Accusation For the year 2010-11

1)  MahaOnline Limited

2)  Diligenta 2 Limited (formerly known as Unisys Insurance Services Limited)- acquired the entire share capital

of Unisys Insurance Services Limited (UISL), which provides life and pensions services to its clients in the

UK.

3)  MS CJV Investments Corporation- Acquired 100% share capital of MS CJV Investments Corporation.

4)  Retail FullServe Limited (formerly known as SUPERVALU Services India Private Limited):Acquired 100%

share capital of the company

*Source-2010-2011 TCS annual report

2011-2012

During the financial year 2011-12, the volatility in the macroeconomic environment continued to cast its shadow and most

of the markets where TCS operates in, were impacted. Even in this environment, the Company recorded industry leading

financial performance. The major contributing factors for such all-round performance across geographies and industry

verticals were the Company‟s customer -centric approach and its ability to innovate customer specific solutions, focus on

 pricing, disciplined execution of complex projects and the rigor in following strong internal processes. [4]

Based on the Company‟s performance, the Directors are pleased to recommend for approval of the members a final

dividend of ` 8 per share and a special dividend of ` 8 per share for the financial year 2011-12 taking the total dividend to `

25 per share (previous year ` 14 per share) on the capital of 1,95,72,20,996 equity shares of `1 each. [4]

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2012-13

During the financial year 2012-13, the global economic environment was on a slow growth path. There were signs of faster

growth in certain geographies, primarily in the emerging markets. The prevailing uncertainties were challenging, which

called for much higher level of efficiency and preparedness for participants in the market. [5]

Based on the Company‟s performance, the Directors are pleased to recommend for approval of the members a final

dividend of ` 13 per share for the financial year 2012-13 taking the total dividend to ` 22 per share (previous year ` 17 per

share excluding special dividend of ` 8 per share) on the capital of 195,72,20,996 equity shares of ` 1 each. [5]

Strategic acquisition

The Company has made acquisitions over the past few years either directly or through its subsidiaries. During the year

2012-13, the Company acquired Computational Research Laboratories Limited (CRL).

2013-14

For the financial year ended March 31, 2014, the Company has recorded a strong revenue and margin performance. There

was holistic growth across markets and industries during the financial year. Europe led the growth in major markets, while

UK and North America continued to grow in line with the Company average. All major industry verticals grew in double

digits led by retail, manufacturing, life sciences & healthcare and BFSI during the year. The Company‟s full services

capabilities continue to be leveraged by customers with new service lines growing at a fast pace led by consulting,

assurance services, infrastructure services and engineering & industrial solutions. [6]

Based on the Company‟s performance, the directors are pleased to recommend for approval of the members, a final

dividend of `20 per share for the financial year 2013-14, taking the total dividend to `32 per share (previous year `22 per

share) on 195,87,27,979 equity shares (195,72,20,996 equity shares as at March 31, 2013) of `1 each. [6]

Strategic acquisition

During the financial year 2013-14, the Company through its subsidiary Tata Consultancy Services Netherlands BV (TCS

 Netherlands BV), acquired French IT services company Alti S.A. (Alti), regarded as one of the top five system integrator

companies in France with leading French corporations in the banking, financial services & insurance, energy & utilities,retail & CPG, manufacturing and life science sectors as its key customers. Alti‟s acquisition has strengthened TCS‟ ability

and footprint to service its customers in France and other regions, leveraging its strong talent pool.

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Average PE multiple

End of year Price earning ratio(times)

Fiscal Year 2013-14 21.79

Fiscal Year 2012-13 22.14

Fiscal Year 2011-12 22.01

Fiscal Year 2011-10 25.56

Fiscal Year 2009-10 21.89

*Source TCS annual report 

P/E tells us how much investors are willing to pay per dollar of earnings. For this reason it's also called the "multiple" of a

stock. In other words, a P/E ratio of 20 suggests that investors in the stock are willing to pay $20 for every $1 of earnings

that the company generates. However, this is a far too simplistic way of viewing the P/E because it fails to take into account

the company's growth prospects. [7]

Top Five Price Earnings Ratio (currently) in Computer-Software Sector

Sr Company P/E 

1 Dynacons Tech 348.00

2 SQS India BFSI 32.49

3 Saksoft 27.18

4 TCS 

26.565 Cyient  25.60

*Source- moneycontrol.com

Analysis-

As we TCS is currently Fourth on the list of companies as per there Price to Earnings ratio. This suggest that investor is

willing to pay Rs.20 for every Rs.1 of earnings that the company makes.

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S&P BSE IT Benchmark Index (Five Year Performance)

Year Open High Low Close

2010 5204.97 6845.09 4758.86 6824.82

2011 6831.74 6921.41 4638.8 5751.93

2012 5742.68 6361.42 5134.08 5684.08

2013 5701.77 9189.67 5584.02 9081.78

2014 9120.1 11289.07 8155.24 11207.45

*Source- http://www.bseindia.com/indices/indexarchivedata.aspx 

Analysis-

The year 2011 saw TCS stock surging to 51%, whereas the BSE IT index reduced 15% compared to the previous year. Thus

the company was outperforming the Index in huge manner, and was not being effected by the industries growth or decline.

In the year 2012 the BSE IT index gained only 1.1% over the previous year, whereas TCS stock reduced 1.2%

TATA CONSULTANCY SERVICES (TCS): Shares of India‟s top software services provider ended 2013 with smart gains.

The stock surged almost 73 percent this year, outperforming the BSE IT index which gained 60 percent. [8]

In 2014 BSE IT index gained 23% which was way below the previous year gain of 60%.TCS stock whereas gained 35%,again outperforming the BSE IT index.

Section –  7

Group Learnings

The learning‟s from the particular group activity is that we learnt about the company chosen which is TCS

and the basic work that it does as a company. We learnt about the various decisions that the companies took

in the recent years and the implications of such decision on the performance and the various other financial

aspects of the company. Then we learnt as to how the working capital of TCS is and what we can infer fromthe ratio of the working capital. Then we learnt about the financial mix of the company and in which ratio

they have raised the capital striking a balance between debt and equity. Then we also looked upon the ways

in which the company issued dividend to all its shareholders and how it retained amounts with it for safety

19

20

21

22

23

24

25

26

Fiscal

Year 

2013-14

Fiscal

Year 

2012-13

Fiscal

Year 

2011-12

Fiscal

Year 

2011-10

Fiscal

Year 

2009-10

Price earning ratio(times)

Price earning

ratio(times)

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as well as expansion purpose. lastly we saw the comparison of TCS with the benchmark and also its peers

which actually tells us how our company is different because of various decisions it took in the due course

of time. Last but not least we learnt to distribute the work on different objectives keeping in mind the main

one and then sharing knowledge with each other which would have been more time consuming and hectic if

one person had done the job. We learnt more information and different angles of thought due to many

different persons working that too in less period of time.

SECTION - 8

References

1)  Forbes India Magazine. (Jan 20, 2014). TCS vs. Infosys: How the IT Big Guns Will Fare. Retrieved from

Forbes India Magazine: http://forbesindia.com/article/investment-guide-2014/tcs-vs-infosys-how-the-it-big-

guns-will-fare/36921/1#ixzz3KG2eSjNU 

In Text Reference 

2)  Tata Consultancy Service. (2009-2010) annual report. Retrieved from

http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2009-2010.pdf  

3)  Tata Consultancy Service. (2010-2011) annual report. Retrieved from

http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2010-2011.pdf  

4)  Tata Consultancy Service. (2011-2012) annual report. Retrieved from

http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2011-2012.pdf  

5)  Tata Consultancy Service. (2012-2013) annual report. Retrieved from

http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2012-2013.pdf  

6)  Tata Consultancy Service. (2013-2014) annual report. Retrieved from

http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdf  

7)  Investopedia. Retrieved from www.investopedia.com 

8)  Reuters.(December,2013). Sensex performers. Retrieved from-

http://blogs.reuters.com/india/2013/12/31/sensex-performers-in-2013-tcs-surges-73-percent-sun-pharma-

gains-54-percent/

9)  http://www.tcs.com/SiteCollectionDocuments/Analyst%20Reports/Everest-Group-Report-TCS-BPS-

Leader-Capital-Market-1213-1.pdf  

10) http://www.moneycontrol.com/competition/tataconsultancyservices/comparison/TCS  

11) http://archive.financialexpress.com/news/tcs-bigger-than-infosys-hcl-tech-wipro-tech-mahindra-put-

together-in-market-capitalisation/1166625