- REVIEW OF Q4 AND ANNUAL RESULTS OF TCS ( FOR P/E 31 MARCH 2010
- Tata Consultancy Services is India's largest IT services provider.
- N Chandrasekaran, CEO and MD said: "Our sales and execution machine is primed and we have laid a solid platform for growth. There is significant traction for our strategy of full services which together with our global engagement model positions us well for accelerated growth.” "Our ability to react to growth opportunities and execute efficiently has helped TCS deliver a superior performance for the fourth successive quarter. Our volumes have grown and our margins are at near historic highs," TCS CEO and MD N Chandrasekaran said.
- For the full year, TCS registered a strong volume growth of 17 per cent during the year which Chandrasekaran described as "an exceptional year for TCS". TCS closed 10 large deals in the quarter under review.
- S Mahalingam, CFO and Executive Director, attributed the success in the fourth quarter to "our focus on superior project execution and efficient utilisation of experienced professionals". He added that despite strong currency headwinds, sustained cost efficiencies and treasury management helped improve operating margins and net margins sequentially. "While FY'10 has been a challenging year, we have used this time to improve efficiencies and generate better returns by boosting margins," he said.
- “In FY10, we have been through an entire business cycle where controlled hiring in the first two quarters gave way to rapid recruitment in the last two quarters. We have made 20,000 campus offers for FY 11,” said Ajoy Mukherjee, Vice President, Head, Global Human Resources.
- Attrition rates continued to be stable at 11.8 per cent on a LTM basis. Overseas nationals formed over 10,700 or 6.7 per cent of the total employee base with employees from 80 different nationalities.
- The average age of a TCS employee is 28 yrs; 57 per cent of the workforce has more than 3 yrs experience; and 30 per cent of the company's workforce comprises women.
- Q4'/ANNUAL RESULTS (for P/E 31.03.2010) HIGHLIGHTS:
- Q4 Revenues at Rs 7,738 crore -- up 7.9% Y-on-Y and 1.17% Q-on-Q.
- In dollar terms (consolidated US GAAP), TCS revenue was up 17.61 per cent YoY and 3.07 per cent QoQ . Its net profit rose by 59.69 per cent YoY and 9.69 per cent QoQ.
- Volume Growth at 4.0%-for the Qtr.
- Operating Profits at Rs 2,165 crore -- up 29.1 % Y-on-Y; 3.0% Q-on-Q. OPM up 51 bp sequentially at 28.0%.
- FY10 Operating Profits at Rs 8,018 cr up 21.91%; Operating Margins up 304 basis points at 26.7%
- Net Profit at Rs 2,001 crore -- up 50.1 % Y-on-Y and 9.7% Q-on-Q; Net margin up 201 bp sequentially at 25.9%.
- For the full year (FY2009-10), net profit at Rs 7,001 crore was up 33 per cent. Net Margin up 441 basis points at 23.3% YOY while its revenues at Rs 30,029 crore was up 8 per cent YoY.
- EPS at Rs. 10.15 in Q4 from Rs. 9.3 in Q3. FY10 EPS at Rs 35.67.
- Total FY10 Dividend at Rs 20 per share including Rs 4 as Final Dividend and Rs 10 per share as Special Dividend (proposed) on equity share of Rs 1 each of the company. Total Dividend Payout Ratio at 65.6%.
- Gross addition of 38,063 professionals; net addition of 16,668 professionals; gross addition of 16,851 professionals in Q4; Net addition of 10,775 employees.
- Total employee strength: 160,429; Attrition rate at 11.8 % LTM
FURTHER COMMENTS : It is felt TCS has turned in a GREAT PERFORMANCE in q/e 31.03.2010 and Y/E 31.03.2010. In future, it may even improve on the same, judging by the words of its TOP BRASS, which is brimming with confidence. It is putting a lot of distance between itself and the rest. While all efforts are made to secure accuracy,taking from public domain all data etc, readers may consult TCS/NSE web site etc, if needed. I welcome any comments, discussions, additions, corrections etc.
FURTHER VIEWS "At the current price of Rs.812 (as on 19.04.2010) against the annual EPS of 35.67, the P/E ratio is hardly 22.76 for the trailing year - which, I feel, is low, for the stature of TCS.
Likewise, for an EPS of 109, at the MP of Rs.2753. INFOSYS TECHNOLOGIES has a P/E ratio of just 25.26.
These two IT heavyweights are exceptional performers even in adverse circumstances. They deserve much higher valuations based on their PROJECTED GROWTH POTENTIAL itself. The current year can be expected to be much better than the last year.