Team Members:

MP13009
MP13020
MP13023
MP13028
MP13033

Anil Kumar
Avishekh Kumar Singh
Chandra Shekhar Mishra
Jaydeep Bagchi
Manoj Kumar

Corporate Facts
Tata Consultancy Services is an IT services,
consulting and business solutions organization.
Lineage & History:
TCS is part of the Tata Groups.
Established in 1968 as a division of Tata
Sons Ltd.
Become separated entity on Jan19, 1995.
Workforce:
TCS has over 300,000 of the worlds besttrained IT consultants in 46 countries.

Financial Information:
M-Cap is $87.2b , Highest in India
Revenue of $13.4 billion; &
Net income at $3.1B; up 22.9% Y-o-Y (fiscal
year ending March 31, 2014).

SWOT Analysis
Extensive Global reach
Strong financial
performance
Employee Management
Skill
Innovation Labs

Focus on SMB segment

Growth in worldwide IT
Services
Focus on high end business
and IT consulting
Expanding operation in
countries like China

Significant Exposure to
financial services market
Lack of scale in
consulting operations
Strength

Weakness

Opportunity

Threat
Increasing Employee Cost
Increasing Competition from
foreign firms like Accenture,
IBM
Rupee appreciation
Increased competition from
low-wage countries like
China, Indonesia, etc.

Distribution of Revenue as per geography and significant services

Corporate Governance Analysis

Strong leadership and corporate governance have been TCS' hallmark.
TCS has 10 non-executive and one executive board (as CEO & MD) member.

Mr. Cyrus Mistry

Mr. S Ramadorai
Prof. Clayton M christensen
Mr. Aman Mehta
Dr. Ron Sommer
Mr. Venkatraman Thyagarajan
Dr. Vijay Kelkar
Mr. Ishaat Hussain
Mr. Phiroz A Vandrevala
Mr. O P Bhatt

Leadership Team:

Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Director

>. N. Chandrasekharan, CEO & MD,

>. Rajesh Gopinathan, CFO & VP,
>. A. Mukherjee, EVP & Head, Global Human Resource

Corporate Governance Analysis

Mr. N Chandrasekaran,
CEO & MD (w.e.f. October 6, 2009 for a period of 5 years)
Joined TCS in 1987
MCA from Regional Engineering College, Trichy, Tamil
Nadu in 1986
Bachelor of Science in Applied Science from the
Coimbatore Institute of Technology, Tamil Nadu.
SRM University has conferred the Degree of Doctor of
Literature (2010) on Chandra for his pioneering and
outstanding contributions to the industry.

Salary
(Rs lakh)

Benefits Perquisites and

Allowances (` lakh)

Commission
(` lakh)

130.76

237.54

1500

Corporate Governance Analysis

Separate Management and ownership

Registered Under BSE and NSE
62 Financial Analysts follows TCS.
Strong leadership & corporate governance have been TCSs
hallmark.
- Tata Code of Conduct
- Memorandum & Article of Association
- Corporate Governance Report
- TCS Environment Policy
- TCS Corporate Sustainability Report
- TCS Occupational Health and Safety Policy

TCS Sustainability initiative

Three pillars are

Education & skill building (Spent Rs 51.75 Cr.)
Health (Spent Rs 30.77 Cr.)
Environment (Spent Rs 11.08Cr.)
Total Spending on Corporate Social Responsibility(CSR) as
percentage of profit after tax (%): 0.48%
Recruitment of differently abled people.
Rural development initiatives.

Board of Directors (Non-Executive)

Non-Executive Independent
Directors
Mr. P. A.
Vandrevala

May 13,2011

No. of shares held in the

company
Nil

Dr. Vijay Kelkar

January 5,2010

Nil

Mr. Aman
Mehta

May 5,2004

Nil

Mr. O.P.Bhatt

April 2,2012

Nil

Date of Appointment

Board of Directors (Non-Executives)

Non-Executive Independent
Directors

Date of Appointment

Number of shares
held in the
company

January 12,2006

Nil

September 5,2006

Nil

September 5,2005

Nil

Prof. Clayton M.
Chirtsenson

Dr. Ron Sommer

Mr. V. Tyagarajan

Details of equity shares of the Company held by

the Directors as on March 31, 2014 are given
below:
Name

No. of equity shares

Mr. Cyrus Mistry

41,63,526

Mr. S. Ramadorai

1,99,120

Mr. N. Chandrasekaran

88,528

Mr. Ishaat Hussain

1,740

The voting rights of Members shall be in proportion to their shares of the paid
up equity share capital of the Company as on May 9, 2014.

Shareholder Analysis
Total No. of Stock

195.87 Crs

No of Stock holders:

5,98,756

Stock Held by Institutional Investor:

21.48%

Listing in Foreign Market:

No

Insiders Holding:

No insider

Stock Held by Employees:

Not Available

Approx. trading volume of TCS Stock

Avg. 8,00,000 for last 30 Days

Distribution of Category wise% of Equity Share

Category
Promoters
FII
Insurance Companies
Indian Public and others
Mutual Fund & UTI's
Corporate Bodies
Other Entities of the Promoters Group
NRI
Bank, Financial Institution
Grand Total

% of share
73.69
16.11
4.07
3.93
1.26
0.6
0.2
0.1
0.04
100

Top Ten Equity Shareholders as on 31.03.2014

Name of the Shareholder

% of
holding

Tata Sons Limited

73.69

Life Insurance Corp. Of India

2.27

Franklin Templeton Investment Funds

1.19

Aberdeen Global Indian Equity(Mauritius) Limited

0.58

Oppenheimer Developing Market Fund

0.51

Govt. Of Singapore

0.44

Vanguard Emerging Market Stock Index Fund,

0.42

Lazard Asset Management LLC

0.40

Stitchting Pension fonds ABP

0.36

National Westmininster Bank Plc as depository of first

state Asia pacific leaders

0.36

TCS Financial Rating & Investors

TCS is rated as A by S&P on Dec13 .

Default Spread : 1%
Interest coverage Ratio : 4.25%
No bond issued by TCS
Low debt/equity ratio
Average Investors : Mutual fund, Insurance company & Indian
public
Marginal Investors : Tata Sons & FIIs

Risk & Return

(Risk Profile of TCS)
Based on 6yrs. Monthly available data

Return
Risk
Beta
Systematic Risk
Unsystemtic Risk
Risk Free Rate
Debt Percentage
Equity Percentage
Cost of Debt
Cost of Equity

22.56%
10.46%
0.50
3.84%
6.62%
8.50%
0.26%
99.74%
6.470%
9.27%

Regression Analysis on return of TCS

40%

Regression Eqn.:
= 0.5 + 1.44
Intercept : 1.44
Slope : 0.5
r2 : 0.14

30%

20%

% change in TCS rate

10%

-50%

Series1
Linear (Series1)
0%
-40%

-30%

-20%

-10%

0%

-10%

-20%

-30%

% change in Market rate

10%

20%

30%

40%

Comparison Within Industries

TCS

Infosys

Wipro

HCL Tech

IT

Market

Return

23%

16%

11%

35%

17%

10%

Risk

10%

9%

11%

11%

8%

8%

Beta

0.50

0.39

0.67

0.70

0.50

Systematic Risk

4%

3%

5%

5%

4%

Unsystematic Risk

6%

6%

6%

6%

4%

Observations
1. TCS (23%) has outperformed the market(10%)
2. Risk is more than the market risk.
3. Systematic risk is less as compared to unsystematic risk.

Weightage Average Cost of Capital

Equity
Debt
Equity Percentage (We)

49,193Crs
127 Crs
99.74%

Debt Percentage(Wd)

0.26%

Effective Income Tax

0.24

Marginal Tax Rate

Cost of Debt
Risk Free Rate * (1-Effective Tax Rate)
Kd=8.5 * (1-0.24)
Cost of Equity
{Risk Free Rate + Beta (Market Rate Risk Free
Rate)} ,Ke={(8.5+0.5 * (10.06-8.5)}
WACC = (Wd*Kd + We*Ke)
={(0.26*0.017+99.74*9.27)}/100

0.27
6.47%

9.27%

9.28%

Investment Return (Ratio Analysis)

Ratio:
Mar '14
Return on Equity
38.96%
Return on Capital Employed
50.72%
Return on Assets
28.79%
WACC
9.28%
Cost of Equity
9.27%

Ratio Analysis
Mar '13
Mar '12
Mar '11
Mar '10
36.01%
35.21%
37.01%
37.91%
45.86%
46.09%
44.13%
43.99%
26.93%
25.42%
28.12%
30.41%
9.28%
9.28%
9.28%
9.28%
9.27%
9.27%
9.27%
9.27%

MV/BV Ratio

P/E ratio
26.00

P/E ratio

25.00
24.00
23.00
22.00

21.00
20.00
19.00
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

MV/BV Ratio

10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Economic Value Added:

Economic Value Added (EVA) is a measure of a companys
performance based on its residual wealth.
EVA = Net Operating Profit after Taxes (NOPAT) (Capital * Cost of
Capital)= 14,603.00 Crs (Mar14)
Ratio Calulation Working:
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
PBDIT
26,789.53 19,218.14 14,863.48 11,782.36
8,988.05
Depreciation
1,349.15
1,079.92
917.94
735.26
660.89
EBIT
25,440.38
18,138.22
13,945.54
11,047.10
8,327.16
Net P/L After Minority Interest &
19,163.87 13,917.31 10,413.49
9,068.04
7,000.64
Share Of Associates
Networth
49,194.76 38,645.73 29,579.23 24,504.81 18,466.72
Total Debt
254.35
211.00
116.26
69.27
103.25
Minority Interest
707.99
695.31
558.77
458.17
361.71
Total Liabilities
50,157.10 39,552.04 30,254.26 25,032.25 18,931.68
Reported Net Profit
19,331.87 14,075.69 10,523.45
9,189.79
7,092.66
Total Assets
67,137.78 52,267.22 41,394.49 32,681.04 23,324.30
Book Value (Rs)
251.16
196.94
150.62
124.69
93.84
Market Value (Rs)
2,128.25
1,571.80
1,167.85
1,182.50
780.80
MV/BV Ratio
8.47
7.98
7.75
9.48
8.32
WACC
9.28%
9.28%
9.28%
9.28%
9.28%
EVA (Rs.)
20,785.80
14,467.79
11,137.94
8,724.11
6,570.30
Cost of Equity
9.27%
9.27%
9.27%
9.27%
9.27%
EVA (Equity) (Rs.)
14,603.52
10,334.85
7,671.50
6,796.44
5,288.78

Finding & Conclusions

ROE, ROCE & ROA are increasing over the year.
ROE is more than cost of equity.
Both ROCE & ROA is more than WACC.
All the above indicates, that firm is selecting profitable projects.

Reason for Improvement:

Better operational & financial efficiency decrease in employee &
other cost.
Better risk management