3QFY2012 Result Update | IT

January 17, 2011

Tata Consultancy Services (TCS)

Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 3QFY12 13,204 4,092 31.0 2,887 2QFY12 11,631 3,380 29.1 2,436 % chg (qoq) 13.5 21.1 193bp 18.5 3QFY11 9,663 2,917 30.2 2,346 % chg (yoy) 36.6 40.3 80bp 23.0

ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code IT 216,134 1.0 1,247/903 202,784 1 16,466 4,967 TCS.BO TCS@IN

`1,104 `1,262
12 months

Source: Company, Angel Research

For 3QFY2012, TCS reported a modest set of numbers, in-line with streets expectations on the revenue and operating fronts; however, the company underperformed on the profit front due to huge forex loss. The major highlight of the result was that the addition of two new clients in the US$100mn plus revenue bracket. Management has highlighted that on an overall basis budgets for CY2012 are flat, with the deal pipeline remaining strong. TCS continues to remain our preferred pick along with HCL Tech in the IT pack. We recommend Accumulate on the stock. Quarterly highlights: For 3QFY2012, TCS posted revenue of US$2,586mn, up 2.4% qoq, majorly led by volume growth. INR revenue stood at `13,204cr, up 13.5% qoq. EBITDA and EBIT margin increased by 193bp and 214bp qoq to 31.0% and 29.2%, respectively, aided by 282bp qoq positive impact of INR depreciation against USD. PAT came in at `2,887cr, negatively impacted by forex loss of `300cr, which led to net loss of `92cr in other income. Outlook and valuation: Management indicated that it would hire 15,000 gross employees in 4QFY2012, which implies TCS exceeding its gross hiring target of 60,000 for FY2012 by ~6,000 employees. Even with aggressive hiring plans, management targets to maintain utilization levels excluding trainees at 82-84% in FY2012. Also, the company has already made offers to 43,600 freshers and expects joining ratio of ~70%, with most of them getting inducted in 2QFY2012 and 3QFY2012. The company bagged 10 large deals in 3QFY2012. Thus, over FY2011-13E, we expect TCSs revenue to post a 19.9% CAGR (USD terms), surpassing even the US$10bn revenue mark in FY2012 itself, after achieving the US$8bn milestone in FY2011. EBITDA and PAT are expected to grow at a CAGR of 25.3% and 20.6%, respectively, over FY2011-13E. We value TCS at 19.5x (40% premium to Sensex) FY2013E EPS of `64.7 with a target price of `1,262 and recommend an Accumulate rating on the stock. Key financials (Consolidated, IFRS)
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2009* 27,813 21.9 5,172 3.0 25.8 26.4 41.8 13.8 33.0 28.9 7.7 29.7 FY2010* 30,028 8.0 6,873 32.9 28.9 35.1 31.4 10.3 32.8 28.8 6.9 23.9 FY2011 37,324 24.3 8,715 26.8 30.0 44.5 24.8 8.5 34.3 32.0 5.6 18.6 FY2012E 49,412 32.4 10,776 23.6 30.1 55.1 20.1 7.0 34.9 33.6 4.2 13.9 FY2013E 58,798 19.0 12,669 17.6 29.9 64.7 17.1 5.7 33.3 32.1 3.5 11.6

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 74.1 7.7 13.4 4.8

Abs. (%) Sensex TCS

3m (3.3) (1.4)

1yr (12.8) (3.0)

3yr 76.6 339.1

Ankita Somani
+91 22 3935 7800 Ext: 6819 ankita.somani@angelbroking.com

Source: Company, Angel Research; Note: * In US GAAP

Please refer to important disclosures at the end of this report

TCS | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance (Consolidated, IFRS)

(` cr) Net revenue Cost of revenue Gross profit SG& A expenses EBITDA Dep. and amortisation EBIT Other income PBT Income tax PAT Earnings in affiliates Minority interest Adjusted PAT EPS (`) Gross margin (%) EBITDA margin (%) EBIT margin (%) PAT margin (%)
Source: Company, Angel Research

3QFY12 13,204 6,860 6,344 2,252 4,092 230 3,862 (92) 3,770 854 2,916 29 2,887 14.7 48.0 31.0 29.2 22.0

2QFY12 11,631 6,214 5,417 2,037 3,380 229 3,151 100 3,251 791 2,460 24 2,436 12.4 46.6 29.1 27.1 20.8

% chg (qoq) 13.5 10.4 17.1 10.6 21.1 0.7 22.5 16.0 7.9 18.5 24.1 18.5 18.5 147bp 193bp 214bp 125bp

3QFY11 9,663 5,150 4,513 1,596 2,917 186 2,732 182 2,914 549 2,365 19 2,346 12.0 46.7 30.2 28.3 23.8

% chg (yoy) 36.6 33.2 40.6 41.1 40.3 24.1 41.4 29.4 55.5 23.3 55.6 23.0 23.0 134bp 80bp 98bp (181)bp

9MFY12 35,632 18,954 16,678 6,175 10,503 664 9,839 296 10,136 2,351 7,784 81 7,703 39.4 46.8 29.5 27.6 21.4

9MFY11 27,166 14,559 12,607 4,498 8,109 509 7,600 309 7,909 1,497 6,412 78 6,335 32.4 46.4 29.9 28.0 23.1

% chg (yoy) 31.2 30.2 32.3 37.3 29.5 30.4 29.5 28.2 57.1 21.4 4.6 21.6 21.6 40bp (37)bp (36)bp (162)bp

Exhibit 2: Actual vs. Angel estimates

(` cr) Net revenue EBITDA margin (%) PAT
Source: Company, Angel Research

Actual 13,204 31.0 2,887

Estimate 13,256 30.7 2,936

Var. (%) (0.4) 27bp (1.7)

Broad-based growth
For 3QFY2012, TCS reported modest performance with USD revenue at US$2,586mn, up 2.4% qoq, on the back of volume growth of 3.2% qoq and price realization growth of 1.98% qoq. USD revenue was negatively impacted by 210bp qoq due to cross-currency movement. Going ahead, the company expects pricing to remain stable. In constant currency (CC) terms, revenue came in at US$2,640mn, up 4.6% qoq. In INR terms, revenue came in at `13,204cr, up 13.5% qoq registering higher growth as against USD revenue due to qoq INR depreciation against USD in 3QFY2012. TCS has closed 10 large deals in 3QFY2012, of which three were from the U.S., four from Europe and the U.K. and the rest from emerging economies. These 10 deals span across industry segments two in banking, two in retail, and one each in manufacturing, hi-tech, insurance, life sciences, telecom and utilities.

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 3: Trend in volume and revenue growth (qoq)

8 7.0 6 7.5 7.4 4.7 4.7 3.2 2.9 3QFY11 4QFY11 Volume growth
Source: Company, Angel Research

6.3

(%)

5.7 4

2.4 1QFY12 2QFY12 3QFY12

Revenue growth (USD terms)

Offshoring of volume (3.2% qoq growth in 2QFY2011), steep INR depreciation against USD and improvement in blended pricing (1.98% qoq) led to considerable INR revenue growth of 13.5% in 2QFY2012, offsetting the 0.6% qoq negative effect due to offshore effort mix shift.

Exhibit 4: Revenue drivers for 3QFY2012

16 14 12 10 9.0 13.5

(%)

8 6 4 2 0 (2) Volume Forex movement Pricing (0.6) Effort mix shift offshore Total revenue growth 3.2 2.0

Source: Company, Angel Research

TCSs performance during the quarter was backed by strong demand across all industry segments (excluding telecom and utilities). BFSI, TCSs anchor industry segment, continued to generate incremental revenue and reported 2.0% qoq growth. The companys growth was led by the media and entertainment and retail and distribution industry segments, revenue of which grew by 7.3% and 4.1% qoq, respectively. Other segments such as travel and hospitality, manufacturing, hi-tech and lifesciences and healthcare registered revenue growth of 2.4% qoq each. Revenue from energy and utilities posted a 2.3% qoq decline due to high base effect as this segment registered double-digit growth in 2QFY2012. Revenue from telecom remained sluggish during the quarter, but management has indicated that it is witnessing transformation deals in the telecom industry, majorly in emerging economies, and expects revenue from this segment to pick up from now on.

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 5: Revenue growth (Industry wise)

% to revenue BFSI Manufacturing Telecom Lifesciences and healthcare Retail and distribution Travel and hospitality Energy and utilities Media and entertainment Hi-tech
Source: Company, Angel Research

% chg (qoq) 2.0 2.4 (4.3) 2.4 4.1 2.4 (2.3) 7.3 2.4

% chg (yoy) 17.1 30.7 1.4 22.9 36.1 34.8 12.4 15.4 42.3

43.3 7.8 10.0 5.3 12.3 3.8 4.1 2.2 5.9

Service line wise, global consulting and infrastructure services emerged as the primary growth drivers for the company by posting whopping 10.3% and 13.1% qoq growth in revenue, respectively. Revenue from enterprise solutions, assurance services, BPO and application development and maintenance (ADM) grew by 5.2%, 2.4%, 1.5% and 0.8% qoq, respectively.

Exhibit 6: Revenue growth (Service wise)

% to revenue IT solutions and services ADM Business intelligence Enterprise solutions Assurance services Engg. and industrial services Infrastructure services Global consulting Asset-leveraged solutions BPO
Source: Company, Angel Research

% chg (qoq) 0.8 (4.1) 5.2 2.4 (1.8) 13.1 10.3 (2.7) 1.5

% chg (yoy) 17.9 0.1 43.2 29.1 15.6 21.8 46.9 14.6 14.3

44.0 4.4 11.4 7.6 4.6 10.6 2.8 3.8 10.8

Geography wise, growth was witnessed across all geographies except Middle East and Africa (MEA). Revenue from developed economies such as U.S., Latin America and Continental Europe grew by 2.2%, 5.9% and 6.5%, respectively. Emerging economies such India and Asia posted 3.7% and 3.8% qoq growth in revenue, respectively.

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 7: Revenue growth (Geography wise)

% of revenue U.S. Latin America UK Continental Europe India Asia Pacific MEA
Source: Company, Angel Research

% chg (qoq) 2.2 5.9 (0.9) 6.5 3.7 3.8 (2.2)

% chg (yoy) 20.2 20.6 13.1 36.2 10.1 32.9 26.7

53.3 3.1 15.0 10.5 8.4 7.6 2.1

Hiring spree continues

TCS has been on the hiring spree since 2HFY2010. In 3QFY2012, TCS added whopping 18,907 gross employees and 11,981 net employees, taking its total employee base to 226,751. During the quarter, attrition rate (LTM basis) declined to 12.8% from 13.7% in 2QFY2012. For 4QFY2012, management has guided for gross hiring of 15,000 employees, which implies that on a full year basis for FY2012 TCS will exceed its hiring guidance by ~6,000 employees. Further, the company has given offers to 43,600 campus graduates for FY2013 and expects 70% conversion ratio. These employees are expected to start joining from June 2012.

Exhibit 8: Hiring and attrition trend

Particulars Gross addition Net addition Total employee base Attrition (%) - LTM basis
Source: Company, Angel Research

3QFY11 20,219 12,497 186,914 14.4

4QFY11 19,324 11,700 198,614 14.4

1QFY12 11,988 3,576 202,190 14.8

2QFY12 20,349 12,580 214,770 13.7

3QFY12 18,907 11,981 226,751 12.8

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 9: Trend in utilization

86 84 82 83.8 82.4 83.2 83.1 82.0

(%)

80 78 76 74 72 3QFY11 77.1

76.2 75.1 4QFY11 Including trainees 1QFY12

76.4 74.0 2QFY12 Excluding trainees 3QFY12

Source: Company, Angel Research

For 3QFY2012, utilization level including and excluding trainees declined by 240bp and 110bp qoq to 74.0% and 82.0%, respectively, due to strong hiring done in 2QFY2012 and 3QFY2012.

Margins enhance
TCSs EBITDA and EBIT margin increased by 193bp and 214bp qoq to 31.0% and 29.2%, respectively, aided by INR depreciation against USD, which offsetted the negative impact due to lower productivity and higher SG&A costs.

Exhibit 10: Margin profile

32 31 30 29 28.1 28.3 28.3 27.1 26.2 30.2 30.4 29.1 29.2 31.0

(%)

28 27 26 25 24

3QFY11

4QFY11 EBITDA margin

1QFY12

2QFY12 EBIT margin

3QFY12

Source: Company, Angel Research

EBIT margin witnessed a 282bp positive impact due to INR depreciation. This effect was slightly overshadowed by the negative impact of 10bp and 94bp qoq due to effort shift to GDC, lower productivity and higher SG&A. All in all, the companys EBIT margin improved by 214bp qoq during the quarter.

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 11: Factors affecting EBIT margin of 3QFY2012

375 300 225 282 214

(bp)

150 75 0 (75) (150) Rupee dep/(app) Provision for bad debt (10) (94) Shift to GDC Others Productivity and SG&A Total impact (10) 46

Source: Company, Angel Research

Client pyramid enhances

Client pyramid during the quarter witnessed significant qualitative improvement, with client additions on the higher side of the revenue brackets. TCS added two new clients in the US$100mn+ bracket and one in the US$50mn-100mn bracket. Also, five clients were added in the US$10mn-20mn bracket. In total, 17 clients were added to the US$1mn+ brackets, which is a considerable improvement. Overall, client addition stood robust at 40 in 3QFY2012.

Exhibit 12: Client pyramid

3QFY11 US$1mn5mn US$5mn10mn US$10mn20mn US$20mn50mn US$50mn100mn US$100mn plus Number of active clients Clients added
Source: Company, Angel Research

4QFY11 250 65 62 54 19 8 969 39

1QFY12 254 71 57 58 23 10 959 24

2QFY12 265 75 61 58 24 12 1,010 35

3QFY12 277 74 66 56 25 14 1,003 40

234 61 63 51 16 9 959 35

Outlook and valuation

Management indicated that it will hire 15,000 gross employees in 4QFY2012, which implies TCS exceeding its gross hiring target of 60,000 for FY2012 by ~6,000 employees. Also, the company has already made offers to 43,600 freshers and expects joining ratio of ~70%, with most of them getting inducted in 2QFY2012 and 3QFY2012. The company bagged 10 large deals in 3QFY2012. Even with aggressive hiring plans, management targets to maintain utilization levels excluding trainees at 82-84% in FY2012. For CY2012, on an overall basis, management expects client budgets to remain flat. The company is proving to be a beneficiary of its domain-focused approach towards BFSI, as spending momentum is strong in this vertical. Even when M&A-related work has tapered off, risk compliance and regulatory work is picking up, which is of a bigger size by
January 17, 2011

TCS | 3QFY2012 Result Update

quantum. Thus, growth momentum for the company is expected to remain intact. Accordingly, over FY2011-13E, we expect TCSs revenue to post a 19.9% CAGR (USD terms), surpassing even the US$10bn revenue mark in FY2012 itself, after achieving the US$8bn milestone in FY2011. On account of tailwinds such as 1) strong growth even on the back of 29% growth in FY2011, 2) headroom to scale up utilization levels, 3) SGA expense optimization and 4) INR depreciation as a strong lever, we expect the company to absorb the impact of wage hikes gradually. We expect the EBIT margins downside to be limited to 32bp yoy and settle at 27.9% by FY2013. Managements commentary has turned slightly cautious for the discretionary spend coming in and it is witnessing delays in ramp ups. However, no project cuts are being seen. At the CMP, the stock is trading at 17.1x FY2013E EPS. We value TCS at 19.5x (i.e., at 40% premium to Sensex) FY2013E EPS of `64.7 with a target price of `1,262 and recommend Accumulate on the stock.

Exhibit 13: Key assumptions

FY2012 Revenue growth (USD) USD-INR rate (realised) Revenue growth (`) EBITDA margin (%) Tax rate (%) EPS growth (%)
Source: Company, Angel Research

FY2013 15.0 50.0 19.0 29.9 26.0 17.6

24.9 48.2 32.4 30.1 23.9 23.6

Exhibit 14: Change in estimates

FY2012E Parameter (` cr) Net revenue EBITDA Other income PBT Tax PAT Earlier estimates 49,281 14,659 642 14,343 3,412 10,819 Revised estimates 49,412 14,876 394 14,330 3,442 10,776 Variation (%) 0.3 1.5 (38.6) (0.1) 0.9 (0.4) Earlier estimates 59,528 17,641 1,034 17,485 4,196 13,156 FY2013E Revised estimates 58,798 17,568 936 17,329 4,505 12,669 Variation (%) (1.2) (0.4) (9.5) (0.9) 7.4 (3.7)

Source: Company, Angel Research

January 17, 2011

TCS | 3QFY2012 Result Update

Exhibit 15: One-year forward PE chart

1,800 1,500 1,200

(`)

900 600 300 0

Oct-07

Oct-08

Oct-09

Oct-10

Price

25x

21x

16x

11x

6x

Source: Company, Angel Research

Exhibit 16: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mahindra Satyam Mindtree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Buy Accumulate Accumulate Neutral Accumulate Accumulate Neutral Neutral Buy Neutral Accumulate Accumulate Neutral CMP (`) 425 84 2,660 125 148 72 443 361 42 327 1,104 609 415 Tgt. price (`) 520 96 3,047 163 82 55 1,262 666 Upside (%) 22.4 14.4 14.5 10.3 13.9 30.5 14.3 9.4 Target P/E (x) 13.0 11.0 18.0 8.0 10.0 11.0 10.0 11.5 6.9 9.0 19.5 9.0 15.3 FY2013E EBITDA (%) 17.5 18.7 32.0 15.8 15.4 14.8 14.7 16.6 16.3 22.4 29.9 16.8 19.7 FY2013E P/E (x) 10.6 9.6 15.7 8.0 9.0 9.7 9.8 9.8 5.3 9.6 17.1 7.3 15.4 FY2011-13E EPS CAGR (%) 22.1 74.1 18.9 11.3 19.9 33.0 34.8 (3.1) 19.3 (1.1) 20.6 29.9 11.6 FY2013E RoCE (%) 20.9 21.4 25.8 15.6 19.5 11.7 20.3 14.0 11.0 20.0 32.1 14.6 14.6 FY2013E RoE (%) 23.1 19.8 23.8 12.9 16.9 13.8 16.4 14.2 15.6 14.0 33.3 20.0 20.0

Source: Company, Angel Research

January 17, 2011

Oct-11

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

TCS | 3QFY2012 Result Update

Profit & Loss statement (Consolidated, IFRS)

Y/E March (` cr) Net sales Cost of revenues Gross profit % of net sales SGA expenses % of net sales EBITDA % of net sales Dep. and amortization % of net sales EBIT % of net sales Other income, net Profit before tax Provision for tax % of PBT PAT Earnings in affiliates Minority interest Adj. PAT Fully diluted EPS (`) FY2009*^ 27,813 15,078 12,735 45.8 5,557 20.0 7,178 25.8 577 2.1 6,601 23.7 (467) 6,134 901 14.7 5,233 (1) 61 5,172 26.4 FY2010* 30,028 15,724 14,303 47.6 5,625 18.7 8,679 28.9 721 2.4 7,958 26.5 226 8,184 1,209 14.8 6,975 (0) 102 6,873 35.1 FY2011 37,324 19,937 17,387 46.6 6,189 16.6 11,198 30.0 721 1.9 10,477 28.1 532 11,009 2,174 19.7 8,835 120 8,715 44.5 FY2012E 49,412 26,060 23,352 47.3 8,476 17.2 14,876 30.1 939 1.9 13,936 28.2 394 14,330 3,442 24.0 10,888 112 10,776 55.1 FY2013E 58,798 31,752 27,046 46.0 9,477 16.1 17,568 29.9 1176 2.0 16,392 27.9 936 17,329 4,505 26.0 12,823 154 12,669 64.7

Note:* in US GAAP, ^indicates adjusted for 1:1 bonus

January 17, 2011

10

TCS | 3QFY2012 Result Update

Balance sheet (Consolidated, IFRS)

Y/E March (` cr) Assets Cash and cash equivalents Other current financial assets Accounts receivable Unbilled revenues Other current assets Property and equipment Intangible assets and goodwill Investments Other non-current assets Total assets Liabilities Current liabilities Short term borrowings Redeemable preference shares Long term debt Other non-current liabilities Minority interest Shareholders funds Total liabilities 5,216 516 276 905 313 15,655 22,880 5,289 231 100 11 673 377 20,940 27,621 5,834 33 100 6 1,097 315 25,404 32,788 8,568 30 100 4 1,499 350 30,913 41,465 10,613 100 4 1,827 400 38,087 51,031 1,463 6,153 1,481 3,203 3,749 3,419 1,727 1,685 22,880 1,025 3,653 5,810 1,201 2,127 4,171 3,242 3,784 2,610 27,621 1,554 3,934 8,201 1,349 1,449 5,200 3,379 1,839 2,575 32,788 1,119 6,297 10,424 1,760 1,700 6,560 3,380 1,500 2,600 41,465 2,560 8,900 12,404 2,094 2,000 7,684 3,380 1,500 3,618 51,031 FY2009*^ FY2010* FY2011 FY2012E FY2013E

Note:* in US GAAP, ^indicates adjusted for 1:1 bonus

January 17, 2011

11

TCS | 3QFY2012 Result Update

Cash flow statement (Consolidated, IFRS)

Y/E March (` cr) Pre-tax profit from oper. Depreciation Exp. (deferred)/written off Pre tax cash from oper Other inc./prior period ad Net cash from operations Tax Cash profits (Inc)/dec in acc. recv. (Inc)/dec in unbilled rev. (Inc)/dec in oth. current asst. Inc/(dec) in current liab. Net trade working capital Cashflow from opert. actv. (Inc)/dec in fixed assets (Inc)/dec in investments (Inc)/dec in intangible asst. (Inc)/dec in non-cur.asst. Cashflow from invt. actv. Inc/(dec) in debt Inc/(dec) in equity Inc/(dec) in minority int. Dividends Cashflow from finan. actv. Cash generated/(utilised) Cash at start of the year Cash at end of the year FY2009*^ 6,601 577 61 7,117 (467) 6,651 901 5,749 (763) (129) (1,664) 1,589 (967) 4,782 (1,304) 923 (1,945) (645) (2,971) 433 (286) 83 (1,613) (1,383) 427 1,035 1,463 FY2010* 7,958 721 103 8,576 226 8,802 1,209 7,593 343 280 1,077 (212) 1,489 9,081 (1,142) (5,709) 177 (925) (7,600) (397) 571 64 (2,158) (1,920) (438) 1,463 1,025 FY2011 10,477 721 120 11,078 532 11,611 2,174 9,437 (2,391) (148) (3,255) 347 (5,448) 3,989 (1,750) 5,597 (138) (3,275) 435 419 328 (62) (4,580) (3,895) 529 1,025 1,554 FY2012E 13,936 939 113 14,762 394 15,156 3,442 11,714 (2,223) (411) (2,615) 2,731 (2,518) 9,196 (2,300) 339 (1) (2,839) (4,801) 400 35 (5,267) (4,831) (435) 1,554 1,119 FY2013E 16,392 1,176 154 17,415 936 18,351 4,505 13,845 (1,980) (334) (2,902) 2,015 (3,201) 10,644 (2,300) (1,785) (4,085) 327 50 (5,496) (5,118) 1,441 1,119 2,560

Note:* in US GAAP, ^indicates adjusted for 1:1 bonus

January 17, 2011

12

TCS | 3QFY2012 Result Update

Key ratios
Y/E March Valuation ratio(x) P/E (on FDEPS) P/CEPS P/BVPS Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value Dupont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/Sales) Asset turnover ratio (Sales/Assets) Leverage ratio (Assets/Equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios(x) Asset turnover (fixed assets) Receivables days 7.4 81 7.2 71 7.2 80 7.5 77 7.7 77 28.9 33.5 33.0 28.8 41.5 32.8 32.0 41.1 34.3 33.6 42.8 34.9 32.1 43.1 33.3 0.9 0.9 0.2 1.2 1.5 33.4 0.9 1.0 0.3 1.1 1.3 33.3 0.8 1.1 0.3 1.1 1.3 34.8 0.8 1.0 0.3 1.2 1.3 35.2 0.7 1.1 0.3 1.2 1.3 33.7 26.4 29.4 8.2 80.0 35.1 38.8 11.0 107.0 44.5 48.2 23.4 129.8 55.1 59.9 26.9 157.9 64.7 70.7 28.1 194.6 41.8 37.6 13.8 0.7 7.7 29.7 9.3 31.4 28.5 10.3 1.0 6.9 23.9 7.5 24.8 22.9 8.5 2.1 5.6 18.6 6.4 20.1 18.4 7.0 2.4 4.2 13.9 5.0 17.1 15.6 5.7 2.5 3.5 11.6 4.0 FY2009*^ FY2010* FY2011 FY2012E FY2013E

Note:* in US GAAP, ^indicates adjusted for 1:1 bonus

January 17, 2011

13

TCS | 3QFY2012 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

TCS No No No No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

January 17, 2011

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