| 52 W H/L 2303/1504
Result is below expectation
Order book ($ Bn ) came at $ 6.9 Mn vs QoQ $ 8.9 Mn, YoY $ 5.7 Mn
CC yoY came at -6.3% vs expectation of -5.9%, QoQ 3%, YoY 10.6%
Dollar revenue came at $ 5059 Mn vs expectation of $ 5135.3 Mn, QoQ $ 5444 Mn, YoY $ 5485 Mn
Net sales came at Rs. 38322 Cr (-4.1% QoQ, 0.4% YoY) vs expectation of Rs. 38910.5 Cr, QoQ Rs. 39946 Cr, YoY Rs. 38172 Cr
EBIT came at Rs. 9048 Cr (-9.7% QoQ, -1.9% YoY) vs expectation of Rs. 9431.7 Cr, QoQ Rs. 10025 Cr, YoY Rs. 9220 Cr
EBIT Margin came at 23.6% vs expectation of 24.2%, QoQ 25.1%, YoY 24.2% Adj. PAT came at Rs. 7008 Cr vs expectation of Rs. 7694.4 Cr, QoQ Rs. 8049 Cr, YoY Rs. 8131 Cr
Quarter EPS is Rs. 18.7
Stock is trading at P/E of 26.1x FY21E EPS
Total income from operations 38,322 Cr
38,172 Cr (0.39%) YoY | 39,946 Cr (-4.02%) QoQ
Year ending revenue: 156,949 Cr Vs. 146,463 Cr (7.11%)
Net Profit of 7,049 Cr
8,153 Cr (-13.57%) YoY 8,093 Cr (-12.93%) QoQ
Year ending Net profit: 32,447 Cr Vs. 31,472 Cr (3.01%)
EPS (in Rs.) 18.68
21.67 YoY | 21.45 QoQ
Year ending EPS: 86.19 Vs. 83.93
View: Result is below expectation. YoY and QoQ revenue declined and profit
also declined. Operating profit also corrected in this quarter as compare
to YoY and QoQ.
Business Updates & Highlights:
Operating profit fell 9.7% to Rs 9,432 crore. Margin narrowed to 23.6% from
25.1%. Net margin at 18.3%.
Dollar revenue fell 7% to $5,060 million.
Company is primarily operating into four segment viz. BFSI – 39.8%, Mfg
–10.1%, Retail & consumer – 15.4%, Communication – 16.9% and Other – 17.6%
YoY topline growth for BFSI – 2%, Mfg – (3.8%), Retail & consumer –
(22.6%), Communication – 0.21% and Other – 3.9%.
YoY bottom line growth for BFSI – (0.4%), Mfg – (7.8%), Retail – (22.6%),
Communication – 3.1% and others – 27.6%.
Markets: Demand contraction was broad-based by geography. Other than Europe
(+2.7%) and Latin America (+0.2%), growth declined in all other markets:
North America (-6.1%), UK (-8.5%), India (- 27.6%), Asia Pacific (-3.2%),
and MEA (-11.7%).
Life Sciences & Healthcare continued to grow strongly at 13.8% YoY.
Q1FY21 Total Contract Value: $6.9 Bn
Consolidated headcount: 443,676 as of June 30, 2020.
Board of Directors of the Company at its meeting held on July 09, 2020,
inter alia, have declared an Interim Dividend of Rs. 5 per Equity Share of
Rs. 1 each of the Company Record date is 17th July 2020 and Payment date is
31st July 2020.
Financial
ROE and ROCE is around 37% and 48% respectively and book value per share is
around INR 225 and share is currently trading at 9.8x of its book value.
Company is currently trading at annualized PE of around 30 which is high as
per Industry benchmark. Promoter holding is around 72% in the company which
is very strong and stable. FIIs mutual fund and Insurance cos hold around
15.7%, 2.7% and 5.4% in the company. Cash and cash equivalent from
operating activities as of June 2020 is around INR 9,290 Cr.
Share View: Share price high 2,304 (52 week) and now 2,200. Share strong
support price is INR 2,090/2002. Long term investor should continue with
the company. Short term outlook is bearish. Tata Consultancy Services is an
IT services, consulting and business solutions organization that has been
partnering with many of the world's largest businesses In their
transformation journeys for over 50 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, recognized as a benchmark of
excellence in software development.
Opportunities: As per the company recent report "company believe that by
2025, only 25% of their associates will need to work out of our facilities
at any point of time; and every associate will be able to realize their
potential without spending more than 25% of their time in a TCS office.
This can lead to potential big saving like infrastructure cost eg. Rent,
overheads, electricity, cabs and admin cost etc. In this quarter this is
already visible other cost INR 2,722 Vs. 3,393 Cr in YoY Vs. 3,451 Cr in
QoQ therefore saving by 19.7% in YoY and 21.1% in QoQ. After an initial
period of disruption, customers have now stabilized their operations and
are now embarking on new beginnings to adapt and thrive in a post-pandemic
world. Aegon UK has selected TCS as the strategic partner to provide
end-to-end digital solutions by leveraging new-age technologies and newer
ways of working for an extended duration of 3 years. TCS continues to be
the global industry benchmark in talent retention, with the IT Services
attrition rate (LTM) at 11.1%.
Risk: As the pandemic gripped the rest of the world, software outsourcers
also lost billings as they generate most of their business overseas and the
bulk of it comes from clients in financial services, manufacturing and
communications sectors. Due to global pandemic Clients are also likely to
cut back spending as the pandemic will force companies to prioritise
critical technologies over initiatives aimed at tech
transformation—something that had been driving growth recently for Indian
IT firms, according to Gartner. Worldwide IT spending is expected to
decline 8% over last year to $3.4 trillion in 2020, it had predicted in
May. Company has contingent liabilities in the tune of INR 3.2K Cr
(approx.) towards legal claim against the company and matter is pending in
the court.
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