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Group 7
Amit Phadke 07 Chintan Dave 14 Hanu Prateek 21 Mayank Savla 28 Piyush Saraogi 35 Rohit Thakur 42 Shekhar Modi 49
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
I.T.!
MAJOR PLAYERS
Global IBM: USA Cap Gemini: France Hewlett Packard: USA Sodexho Alliance: France Accenture: USA Oracle: USA Indian TCS Infosys Wipro HCL
I.T. in India
Establishment of TCS in 1968 Export revenue ~ $59bn, 26% of total exports One of the fastest growing sectors - More than 30% annual growth for past 20 years Software services exports to more than 60 countries, including half of all fortune 500 Source of Bread and butter for 2.5Mn population
The Competition
Market Cap. (Rs. in Crores)
TCS Infosys Wipro HCL Tech Oracle Finance Tech Mahindra Mphasis Mahindra Satyam Patni Computer Financial Tech 231,713.20 148,783.51 90,150.45 30,539.89 17,015.59 9,296.14 8,861.27 8,754.62 4,129.00 3,569.70
Sales Turnover
Net Profit
Total Assets
29,275.41 25,385.00 26,340.70 6,794.48 2,360.51 4,965.49 3,770.09 4,776.10 2,030.61 357.69
7,569.99 6,443.00 4,843.70 1,198.28 967.98 696.72 996.88 -127.6 655.05 91.94
19,620.61 24,501.00 26,065.00 6,333.25 5,150.34 5,190.40 2,909.44 3,423.10 2,968.30 2,455.40
MARKET CAP
SALES TURNOVER
4,776.10, 4% 3,770.09, 4% 4,965.49, 5% 2,360.51, 2% 6,794.48, 6% 26,340.70, 25% 29,275.41, 28% 2,388.30, 2%
TCS Infosys Wipro HCL Tech Oracle Financ
25,385.00, 24%
SALES TURNOVER
FY 201011 TCS Infosys Wipro HCL Oracle 29275.41 27501.00 27176.00 14977.3 2,360.51 FY 200910 23222.05 22742.00 24093.3 12048.1 2,212.62 % Change 28.2 20.09 12.80 24.31 6.68
NET PROFIT
FY 2010- FY 200911 10 7,569.99 5,618.51 6823.00 5332.1 1522.7 967.98 6219.00 4611.60 1291 695.71 % Change 34.73 9.71 15.62 17.94 39.13
SALES TURNOVER
Q1 201011 TCS Infosys Wipro HCL Oracle 10797.0 7485.0 8492.9 4303.5 712.1 Q1 200910 8217.3 6198.0 7190.6 3425.4 650.3 % Change 31.39 20.76 18.11 25.63 9.50
NET PROFIT
Q1 2010-11 2380.3 1722.0 1339.8 510.9 204.2 Q1 2009-10 1863.2 1488.1 1325.3 341.8 193.3 % Change 27.75 15.72 1.09 49.47 5.62
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
Total Assets
25,147.27
A major portion of total liabilities is the Shareholders equity, which in turn comes mostly from Retained earnings
25,147.27 Crore
19,000.36 Crore
16,669.6 Crore
Assets
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
23222
25000 21070
25000
20000
10000
10000
5000
5000
5000
4696.21
Increasing Profits
2. Employee costs are almost 50% of the expenditure 3. Operation Costs and other expenses fell by around 522.73 crores from 2009 to 2010 and increased again by 1831.22 crores from 2010 to 2011 4. Huge increase in income from 2010 to 2011 in comparison with 2009 to 2010 5. Constant weighted average number of shares (195,72,20,996)
2009-10
3% 1%
2008-09
4%
94%
96%
96%
Income
0% 3% 0% 3% 0%2% Employee costs 44% Operation and other expenses Interest 54% Depreciation and amortisation
47%
Expenses
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
Liquidity Ratios
2010-2011 Current Ratio Quick Ratio (Acid Test ratio) Average Collection Period (days) 2.88 2.88 80 2009-2010 1.88 1.88 71 2008-2009 2.26 2.26 79
Interpretations
TCS has more than enough current assets to pay-off its liabilities (Current Ratio is well above 1) Being a service oriented industry, the quick ratio has a tendency to follow the current ratio very closely There is some scope for improvement in the average collection period (industry average ~68 days)
Interpretations
Most of TCS activities are funded through equity rather than debt (Debt-equity ratio is almost 0) Steadily growing PE ratio indicates that customers are willing to pay more for each rupee of earnings, which is a major indication of TCS future growth potential I.T. being a service industry, inventory turnover ratio is very high (as inventory is very low) A Fixed Asset Turnover ratio of over 6.5 implies very efficient use of companys fixed assets
Profitability Ratios
2010-2011 Net Profit Margin (in %) Return on Equity (in %) Earnings per Share (Rs.) 24.62 37.00 46.27 2009-2010 23.62 37.91 35.67 2008-2009 23.31 33.48 26.81
Interpretations
Net profit margin is next only to Infosys for FY11, which indicates that it is a more profitable company and has better control over its costs as compared to most of its competitors Highest ROE among the large Indian IT firms for FY11 and hence, it has outperformed all its competitors and is most efficient at generating profits with the money the shareholders have invested. EPS has grown at almost 30% annually over the past 2 years, which serves as a major indicator of the continuous improvement in the profitability of the company
Agenda
IT industry Introduction TCS Balance Sheet Summary TCS Profit and loss accounts summary TCS Ratio summary and interpretations Conclusions & Recommendations
Recommendations
Scope for improvement in Average collection Period TCS should keep a close watch on Infosys and Wipro to maintain its top position Given its strong presence across major global markets, TCS can benefit from the improving demand traction even further. Its growing influence in the domestic market for IT services should be utilized to add to its strength. Market share in the domestic market is only about 10% having a huge scope for expansion Possibilities of expansion in hardware and network communications part of IT Use of currency forward contracts and options to hedge receivables and revenues
Questions?