1 TABLE OF CONTENTS

2 About Tata Consultancy Services (TCS)..........................................................................................2

3 Brief industry outlook....................................................................................................................2
4 Financial Statements.....................................................................................................................3
4.1 Abridged Balance Sheet.........................................................................................................3
4.2 Abridged Income Statement..................................................................................................3
4.3 Abridged Cash Flow Statement..............................................................................................3
5 Accounting Principles....................................................................................................................4
6 Financial Statement Interpretation...............................................................................................4
7 Detailed Ratio Analysis..................................................................................................................5
7.1 Firm’s Liquidity in Short Run..................................................................................................5
7.2 Firm’s Solvency in Long Run...................................................................................................5
7.3 Firm’s Profitability Ratio........................................................................................................5
8 Trend analysis................................................................................................................................6
9 Comparative Analysis....................................................................................................................7
10 performance of the company with the competitor...................................................................7
11 Overall Financial Health of TCS..................................................................................................7
12 Attached files.............................................................................................................................7

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2 ABOUT TATA CONSULTANCY SERVICES (TCS)

TCS is an IT services, consulting and business solutions provider that has been partnering with
the world’s largest businesses in their transformation journeys for the last fifty years. TCS
offers a consulting led, cognitive powered, integrated portfolio of business, technology and
engineering services and solutions. This is delivered through its unique, Location Independent
Agile delivery model, a benchmark of excellence in software development.

The company generated consolidated revenues of US $20 billion (Rs. 1.39 lakh crore) for the
year ended March 31, 2019 and is listed on the BSE (formerly Bombay Stock Exchange) and
the NSE (National Stock Exchange) in India. TCS geographic footprint covers North America,
Latin America, the United Kingdom, Continental Europe, Asia Pacific, India, and Middle East
and Africa.

Listed In

3 BRIEF INDUSTRY OUTLOOK

In FY 2019, the global market for software and services is estimated to have grown to $1.4
trillion. IT Services is estimated to have grown by 3.2% YoY, driven by strong growth in digital
engagements, particularly cloud adoption. Business Process Management grew by 4.5% over
the prior year, on account of greater focus on automation, while packaged software grew
7.4% YoY, driven by rapid adoption of SaaS, and security and privacy solutions.

TCS has historically grown much faster than the market. In the latest five-year period, while
the market for IT-BPM services expanded by a CAGR of 2% (IT Services CAGR: 1.5%), TCS had a
CAGR of 9.2% in USD terms. One reason for the outperformance is market share gains on
account of superior capabilities, and higher customer satisfaction. The second reason has
been greater participation in our customers’ growth and transformation initiatives, which
represent the expanding part of their technology spending.

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4 FINANCIAL STATEMENTS

4.1 ABRIDGED BALANCE SHEET

ABRIDGE BALANCE SHEET* FY18 FY19

Period Ending 31-Mar-18 31-Mar-19
ASSETS
Total Current Assets 8,12,240 9,21,310
Total Non-Current Assets 2,71,850 2,49,220
Total Assets 10,84,090 11,70,530

LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities
Total Current Liabilities 1,78,280 2,20,840
Total Non-Current Liabilities 29,380 29,600
Total Liabilities 2,07,660 2,50,440
Shareholders' Equity
Total Shareholders' Equity 8,72,410 9,15,560
Non-Controlling Interests 4,020 4,530
Total Liabilities and Shareholders' Equity 10,84,090 11,70,530

1.1 * All numbers are in INR,

4.2 ABRIDGED INCOME STATEMENT

ABRIDGE INCOME STATEMENT* FY18 FY19

Total Revenue 12,31,040 14,64,630
Total Cost of Revenues 7,12,880 8,51,580
Gross Profit 5,18,160 6,13,050
Total Operating Expenses 2,13,140 2,38,550
Operating Income 3,05,020 3,74,500
Total Other Income/(Expense) 35,900 41,130
Income Before Income Taxes 3,40,920 4,15,630
Total Taxes 82,120 1,00,010
Net Profit After Taxes 2,58,800 3,15,620
Non-Controlling Interest -540 -900
Net Income Before Extraordinary Items 2,58,260 3,14,720
Net Income After Extraordinary Items 2,58,260 3,14,720

1.2 * All numbers are in INR,

4.3 ABRIDGED CASH FLOW STATEMENT

ABRIDGE CASH FLOW STATEMENT* FY18 FY19

Net cash generated from Operating activities 2,50,670 2,85,930
Net cash generated from Investing activities 28,860 15,960
Net cash generated from Financing activities (2,68,850) (2,78,970)

Cash and cash equivalents at the beginning of the year 2,13,140 2,38,550

* All numbers are in INR, millions

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 Cash and cash equivalents at the end of the year 3,05,020 3,74,500

5 ACCOUNTING PRINCIPLES
• These consolidated financial statements have been prepared in accordance with the Indian
Accounting Standards.
• These consolidated financial statements have been prepared on historical cost basis except
for certain financial instruments which are measured at fair value or amortised cost at the
end of each reporting period.
• For useful lives of property, plant and equipment, the Group reviews the useful life of
property, plant and equipment at the end of each reporting period. This reassessment may
result in change in depreciation expense in future periods.
• Cost recognition Costs and expenses are recognised when incurred and have been
classified according to their nature.
• Deferred income taxes are recognised using the balance sheet approach.
• Property, plant and equipment Property, plant and equipment are stated at cost
comprising of purchase price and any initial directly attributable cost of bringing the asset
to its working condition for its intended use, less accumulated depreciation (other than
freehold land) and impairment loss, if any.
• Depreciation is provided for property, plant and equipment on a straight-line basis.

6 FINANCIAL STATEMENT INTERPRETATION

• COGS has gone up by 138,000 out of which Employee cost has gone up by 102,000. The
primary reason are 29,287 new employees were hired.
• Total Operating Expenses is increased by Rs 25,410 out of which Employee cost has gone
up by 16,460.
• Balance Sheet:
o Investments have decreased by 66,000 and Other Current Financial Assets are
increased by 57,000.
o Other non-current financial assets are decreased by 18,000.
o Trade and Other Payables (Liabilities) have increased by 12,000.
o Other Current Financial Liabilities up by 9840.
o Current Income Tax Liabilities up by 12,460.
• Operating Activity:
o Net Profit is 56,820 and Net Cash generated is 35,260.
o Trade receivable is accounting for 10,000 out of these 20,000 differences.
• Investing Activities:
o Cash Inflow of 61,120 from proceeds from inter-corporate deposits.
o Cash Outflow of 57330 from Bank deposits placed.
o 137,240 Inter-corporate deposits placed.
o Better utilization of cash compared to previous year.
• Financing Activities:

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o Net Cash used in financing activities is 278970 out of which Buy back shares of worth
160000 and Dividend paid is 114,000.

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7 DETAILED RATIO ANALYSIS

7.1 FIRM’S LIQUIDITY IN SHORT RUN

Ratio 2018 2019 % Change Analysis

A positive working capital is always preferable
6,33,96
Working capital 7,00,470 10.5% because it means the firm has more money
0
than it needs at a given moment.
Current ratio has reduced from previous year,
Current ratio 4.56 4.17 -8.4%
but still liquidity is high in the short run.
Current cash debt Though it has reduced, it’s still has high liquidity
1.60 1.43 -10.7%
coverage to cover current debts.

7.2 FIRM’S SOLVENCY IN LONG RUN

Ratio 2018 2019 % Change Analysis

It has reduced from 2018 but is still quite high. This
Debt to Assets means TCS has a high degree of financial leverage
5.22 4.67 -10.5%
Ratio and it can withstand losses without impairing the
interests of its creditors.
TCS is highly solvent and has the ability to repay its
Cash Debt
1.21 1.25 3.4% liabilities from net cash generated from operating
Coverage
activities.

7.3 FIRM’S PROFITABILITY RATIO

Ratio 2018 2019 % Change Analysis

EPS 67.10 83.05 23.8% EPS has improved drastically indicating a highly
profitable year for the firm and for its
shareholders.
Price Earnings 21.20 24.10 13.7% Stock price has increased indicating positive
Ratio market sentiment for TCS.
Gross profit rate 42.09 41.86% -0.6% The ratio has marginally decreased due to mass
% hiring. (As freshers are not billable).
Profit margin 20.98 21.49% 2.4% There is an excellent improvement in Profit Margin
% suggesting improved Billing rates.
Payout Ratio 106.0 92.6% -12.6% TCS has maintained payout ratio range.
%
Asset Turn Over 1.14 1.30 14.4% The increased asset turnover indicates improved
operations thus the firm is efficiently using its
assets to generate sales.

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8 TREND ANALYSIS

Ind AS Remarks
Amounts in Rs crore
FY 2019 FY 2018 CAGR  
Revenues
Total revenue 1,46,46 1,23,10 11.5% Total revenue continuously increasing
3 4
Revenue by geographic segments
Americas 77,562 66,145 11.0% Revenue generated by all geographic
segments increasing
Europe 43,456 34,155 12.9%  
India 8,393 7,921 8.3%  
Others 17,052 14,883 12.2%  
Cost
Employee cost 78,246 66,396 12.8% Employee cost increasing
Other operating cost 28,711 24,192 10.5% Operating cost increasing
Total cost (excluding interest 1,06,95 90,588 12.2%  
& depreciation) 7
Profitability
EBITDA (before other 39,506 32,516 9.9%  
income)
Profit before tax 41,563 34,092 10.0% PBT has increased handsomely
Profit after tax attributable 31,472 25,826 9.5%  
to shareholders of the
Company
Financial Position
Equity share capital 375 191 17.6% Number of shares almost doubled in 5
years
Reserves and surplus 89,071 84,937 11.3% Reserves also increasing
Gross block (property, plant 25,265 23,258 9.9%  
and equipment including
intangible assets)
Total investments 29,330 36,008 105.0%  
Net current assets 70,047 63,396 18.0% Net current assets decreased in FY18 and
again increased in FY19
Earnings per share in INR
EPS - as reported 83.05 134.19 -7.2% EPS increased in FY18 as Equity share
capital reduced and decreased in FY19 as
the Equity share capital almost doubled.
EPS - adjusted for Bonus 83.05 67.10 10.4%  
Issue
Headcount (number)        
Headcount (including 4,24,28 3,94,99 7.3%  
subsidiaries) as on March 31st 5 8

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9 COMPARATIVE ANALYSIS
Key comparison. Additional details in the attachment.

Vertical Analysis comparison Infosys TCS

Gross Profit 34.8% 41.9%
Operating profit 22.8% 25.6%

10 PERFORMANCE OF THE COMPANY WITH THE

COMPETITOR.

Performance Indicator TCS Infosys

Efficiency 125.13% 97.57%
Profitability 21.49% 18.63%
Sales Growth 18.98% 17.23%
Liquidity 417.18% 283.71%
Market Valuation in Millions 75,79,498 32,34,591
Dividend Payout 92.60% 68.60%
Capex in millions 4280 24450

11 OVERALL FINANCIAL HEALTH OF TCS

TCS revenue at the end of 2019 financial year was 146,463 crores, with a growth of 19% over
the prior year. Its operating margin expanded 0.8% year on year, to 25.6%. Net profit was
Rs.31,472 crore, a net margin of 21.5%. TCS’s cash conversion was very good with free cash
flow of Rs.26,461 crore. TCS total dividend pay-out for the year was Rs.30 per share.

TCS’s strong performance can be attributed to its technological adaptation and business
diversification. The huge amount of current cash and cash equivalent suggests that TCS is
gearing up for some major acquisition in the near future. Also, positive requirement of new
talent suggests rapid business expansion in the coming years.

TCS has also completed a successful ₹16,000-crore share buyback at ₹2,100 a share. This,
along with a high PE ratio shows a very positive market sentiment for TCS.

With market capitulation of over 8 lakh crores, there is little doubt why TCS is the biggest IT
firm of India.

12 ATTACHED FILES
• Statements and Ratio.xls

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• Infosys- Veritcal Analysis.xls
• TCS_Data_Sheet -Vertical Analysis.xls
• Trend analysis.xlsx