TCS - Angel PDF

3QFY2014 Result Update | IT
January 17, 2014
Tata Consultancy Services (TCS)
ACCUMULATE
Performance highlights
CMP
Target Price
(` cr)
Net revenue
EBITDA
EBITDA margin (%)
PAT
3QFY14
21,294
6,687
31.4
5,314
2QFY14
20,977
6,639
31.6
4,702
% chg (qoq)
1.5
0.7
(25)bp
13.0
3QFY13
16,070
4,654
29.0
3,552
% chg (yoy)
32.5
43.7
244bp
49.6
Source: Company, Angel Research
TCS, in its 3QFY2014 results, reported revenues and operating margin a tad
lower than expectations while net profit stood higher than estimates on account of
healthy forex gains. The companys performance was impacted due to ~6%
sequential decline in Indian business revenues; international business revenues
grew modestly by 3.8% qoq in USD terms. The companys overall volume growth
came in at 1.8% qoq, which is a bit disappointing; however, excluding India
business, volume growth was healthy at 2.9% qoq. The Managements bullish
commentary, coupled with continued hiring and pick up in discretionary spends
point that TCS will continue to be an outperformer in the sector. We maintain our
Accumulate rating on the stock.
Quarterly highlights: For 3QFY2014, TCS posted a revenue of US$3,338mn, up
3% qoq. In INR terms, the revenue came in at `21,294cr, up 1.5% qoq. The EBIT
margin of the company declined by 42bp qoq to 29.7% as the company
increased its S&M investments. Net profit grew substantially by 13% qoq to
`5,314cr, supported by a forex gain of `299cr as against a loss of `377cr in
2QFY2014.
Outlook and valuation: The Management reiterated that it expects FY2015 to be
better than FY2014 on the back of strong pipeline and budget indications from
clients. A healthy pipeline, broad-based deal signings, initial signs of up-turn in
discretionary spending and good traction in annuity, traditional and
transformational business - all these factors have collectively lent confidence to
the company in estimating FY2015 to be a better year than FY2014. TCS also
indicated that it is reaping benefits of investments in geographies such as
Continental Europe and Latin America. The Management, however, cited a word
of caution on India business, which it expects to remain muted till 1HFY2015 due
to impending elections. Over FY2013-15E, we expect TCS revenue to post a
CAGR of 16.5% in USD terms and of 24.3% in INR terms. We maintain our
Accumulate rating on the stock with a target price of `2,520.
`2,351
`2,520
Investment Period
12 Months
Stock Info
IT
Sector
Market Cap (` cr)
460,865
Net debt (` cr)
(18,189)
Beta
0.5
52 Week High / Low
2,258/1,255
Avg. Daily Volume
125,358
Face Value (`)
BSE Sensex
21,265
Nifty
6,314
Reuters Code
TCS.BO
Bloomberg Code
TCS@IN
Shareholding Pattern (%)

Promoters
74.0
MF / Banks / Indian Fls
5.6
FII / NRIs / OCBs
16.1
Indian Public / Others
4.4
Abs. (%)
3m
1yr
3yr
Sensex
3.5
7.3
12.8
TCS
6.0
74.4
110.2
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)
FY2011
37,324
24.3
8,715
26.8
30.0
44.5
52.8
18.1
34.3
32.0
12.1
40.4
FY2012
48,891
31.0
10,636
22.0
29.5
54.3
43.3
14.2
32.7
32.8
9.2
31.2
FY2013
62,988
28.8
13,942
31.1
28.7
71.2
33.0
11.2
34.0
32.7
7.1
24.6
Source: Company, Angel Research; Note: CMP as of January 16, 2014
Please refer to important disclosures at the end of this report
FY2014E
82,169
30.5
18,920
35.7
30.8
96.6
24.3
10.0
41.2
40.2
5.4
17.6
FY2015E
97,331
18.5
22,446
18.6
30.2
114.6
20.5
8.2
40.1
38.5
4.5
15.0
Ankita Somani
+91 22 3935 7800 Ext: 6819
ankita.somani@angelbroking.com
TCS | 3QFY2014 Result Update
Exhibit 1: 3QFY2014 performance (Consolidated, IFRS)

(` cr)
3QFY14
2QFY14
% chg (qoq)
3QFY13
% chg (yoy)
9MFY14
9MFY13
% chg (yoy)
Net revenue
21,294
20,977
1.5
16,070
32.5
60,258
46,558
29.4
Cost of revenue
10,799
10,701
0.9
8,453
27.8
30,989
24,675
25.6
Gross profit
10,495
10,276
2.1
7,617
37.8
29,269
21,883
33.8
SG& A expenses
3,808
3,637
4.7
2,963
28.5
10,790
8,455
27.6
EBITDA
6,687
6,639
0.7
4,654
43.7
18,479
13,428
37.6
352
310
13.7
273
28.9
952
778
22.4
6,335
6,330
0.1
4,381
44.6
17,527
12,650
38.5
673
(43)
882
699
PBT
7,008
6,287
18,409
13,349
37.9
Income tax
1,652
PAT
5,355
Dep. and amortization

EBIT
Other income
Earnings in affiliates
213
11.5
4,594
52.5
1,556
6.2
1,003
64.8
4,440
2,893
53.5
4,731
13.2
3,592
49.1
13,969
10,457
33.6
41
29
43.6
40
3.3
157
111
41.0
5,314
4,702
13.0
3,552
49.6
13,812
10,346
33.5
EPS (`)
27.1
24.0
12.9
18.1
49.5
70.5
52.9
33.5
Gross margin (%)
49.3
49.0
30bp
47.4
188bp
48.6
47.0
157bp
EBITDA margin (%)
31.4
31.6
(25)bp
29.0
244bp
30.7
28.8
182bp
EBIT margin (%)
29.7
30.2
(42)bp
27.3
249bp
29.1
27.2
192bp
PAT margin (%)
24.2
22.5
173bp
21.8
238bp
22.6
21.9
70bp
Minority interest
Adjusted PAT
Exhibit 2: Actual vs Angel estimates

(` cr)
Net revenue
EBITDA margin (%)
PAT
Actual
Estimate
Var. (%)
21,294
21,434
(0.7)
31.4
31.4
(2)bp
5,314
4,955
7.3
Inline operating results

For 3QFY2014, TCS dollar revenue grew by 3.0% qoq to US$3,438mn. The
company registered a volume growth of 1.8% qoq which was a bit disappointing.
The companys performance was impacted due to a 6% sequential decline in India
business revenues; international business revenues grew modestly by 3.8% qoq in
USD terms. Excluding the India business, volume growth was better than
expectations at 2.9% qoq. In constant currency (CC) terms, the revenue grew
2.1% qoq. In INR terms, the revenue came in at `21,294cr, up 1.5% qoq.
Healthy growth in international business is indicative of continuation of market
share gains for TCS owing to its strength to strategically partner and participate
with clients. A continuing theme of TCS for many quarters has been of broadbased growth across geographies, verticals and service offerings and 3QFY2014
was no different with the exception of India revenue decline. TCS closed 8 large
deals during 3QFY2014. These deals span industry segments as well as
geographies.
January 17, 2014
Exhibit 3: Trend in volume and revenue growth (qoq)

8
7.3
6.1
(%)
5.4
5
4
4.4
3.3
3.1
3.0
4.1
3
2
1.8
1.3
1
3QFY13
4QFY13
1QFY14
Volume growth
2QFY14
3QFY14
Revenue growth (USD terms)
Exhibit 4: Revenue drivers for 3QFY2014

2
1.80
1.53
1
(%)
0.74
0
(0.40)
(0.61)
(1)
Volume
Offshore effort shift
Currency impact
CC realization
Total revenue growth
Broad-based show
TCS performance during the quarter was backed by healthy demand seen across
all its industry segments. The companys anchor industry segment - banking,
financial services, and insurance (BFSI) maintained its growth momentum with
revenues growing by 2.1% qoq. The company expects BFSI to grow at least in line
with the companys average in FY2014. IT spending in the BFSI industry is seen to
be coming from work related to compliance, risk monitoring and digitization.
Among other verticals, Manufacturing (+7.9% qoq), Telecom (+6.4% qoq) and
Life sciences & Healthcare (+6.6% qoq) were strong performers and were primary
growth drivers for the company. The Management indicated that the Telecom
segment is now doing better and the company may witness consistent growth from
this industry segment going ahead. The rest of the industry segments such as Retail
& Distribution, Energy & Utilities and Travel & Hospitality posted 2.3%, 3.0% and
6.1% qoq growth in revenues, respectively.
January 17, 2014
Exhibit 5: Revenue growth (Industry wise)

% to revenue
% chg (qoq)
% chg (yoy)
42.7
2.1
15.8
Manufacturing
8.8
7.9
20.7
Telecom
9.6
6.4
17.8
Lifesciences and healthcare
5.9
6.6
32.3
Retail and distribution
13.8
2.3
20.1
Travel and hospitality
3.5
6.1
13.4
Energy and utilities
3.8
3.0
16.6
Media and entertainment
2.3
7.7
27.7
Hi-tech
5.3
1.1
6.6
BFSI
Service line wise, three service areas led TCS growth during 3QFY2014
Infrastructure services (+4.8% qoq), Enterprise services (+5.0% qoq) and Global
Consulting (+6.1% qoq). These verticals have collectively accounted for 51% of the
incremental revenue during the quarter. The companys anchor service line
Application Development and Maintenance (ADM) maintained its revenue growth
momentum; its revenues grew 2.3% qoq. The Management indicated that the deal
pipeline is robust for services such as ADM, Infrastructure Management,
Consulting, Enterprise Services, and Products.
Exhibit 6: Revenue growth (Service wise)

% to revenue
% chg (qoq)
% chg (yoy)
IT solutions and services

ADM
41.4
2.3
13.9
Enterprise solutions
15.7
5.0
21.3
Assurance services
8.5
3.0
28.7
4.6
0.8
14.1
12.0
4.8
19.6
23.9
Engg. and industrial services

Infrastructure services
Global consulting
3.4
6.1
Asset-leveraged solutions
2.3
(12.2)
12.1
4.8
BPO
(4.2)
13.8
Geography wise, growth was largely led by Asia Pacific, Continental Europe and
Middle East & Africa, the revenues of which grew by 7.4%, 6.7% and 13.3% qoq,
respectively. North America grew 2.1% while UK grew by 4.8% qoq.
January 17, 2014
Exhibit 7: Revenue growth (Geography wise)

% of revenue
U.S.
Latin America
% chg (qoq)
% chg (yoy)
52.7
2.1
16.8
2.3
3.0
(25.5)
U.K.
17.5
4.8
16.6
Continental Europe
11.6
6.7
48.7
India
6.3
(5.9)
(3.3)
Asia Pacific
7.4
7.4
15.1
MEA
2.2
13.3
22.2
Hiring spree continues

In 3QFY2014, TCS added 14,663 gross employees and 5,463 net employees,
taking its total employee base to 290,713. During the quarter, the attrition rate
(last twelve month [LTM] basis) for the company remained flat on a sequential
basis as against peer companies which have reported increases in attrition rates.
For FY2014, the Management increased its gross hiring target to 55,000 from
50,000 given earlier, while for FY2015, it maintained its fresher hiring target of
25,000.
Exhibit 8: Hiring and attrition trend

Particulars
Gross addition
Net addition
Total employee base
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
17,145
20,098
10,611
17,362
14,663
9,561
12,559
1,390
7,664
5,463
263,637
276,196
277,586
285,250
290,713
11.2
10.6
10.5
10.9
10.9
Attrition (%) - LTM basis

For 3QFY2014, the utilization level - excluding as well as including trainees,

improved by 90bp and 250bp qoq to 84.3% and 77.5%, respectively. The
Management indicated that the company is comfortable in excluding trainee
utilization range of 82-84%.
Exhibit 9: Trend in utilization

86
84
82
(%)
80
81.7
82.7
82.1
83.4
77.5
78
75.0
76
74
84.3
72.1
72
72.5
72.2
70
3QFY13
4QFY13
1QFY14
Including trainees
2QFY14
3QFY14
Excluding trainees
January 17, 2014
Margins decline slightly

TCS EBITDA and EBIT margins declined by 25bp and 42bp qoq to 31.4% and
29.7%, respectively, largely due to increase in S&M investments. The movement in
the EBIT margin was on account of following factors: 1) operational efficiency:
+65bp, 2) S&M investments: -62bp, and 3) currency impact: -45bp.
Exhibit 10: Margin profile

32
31.6
31.4
31
(%)
30
29.0
29
28.6
28.4
30.2
29.7
28
27
27.3
26
27.0
26.5
25
3QFY13
4QFY13
1QFY14
EBITDA margin
2QFY14
3QFY14
EBIT margin
Client metrics
The client pyramid during the quarter witnessed a qualitative improvement,
with client additions seen in higher revenue brackets. Client metrics for the
company continued to remain healthy with the company adding two clients each in
the US$50-100mn and US$20-50mn revenue bracket. Overall, the company
added 24 clients in US$1mn+ revenue category. The company signed eight large
deals in the quarter.
Exhibit 11: Client pyramid

3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
US$1mn5mn
278
348
348
369
378
US$5mn10mn
88
79
93
94
109
US$10mn20mn
71
90
92
99
95
US$20mn50mn
67
69
71
72
74
US$50mn100mn
31
35
34
31
33
US$100mn plus
16
17
19
22
22
January 17, 2014
Outlook and valuation

The Management reiterated that it expects FY2015 to be better than FY2014 on
the back of strong pipeline and budget indications from clients. The current deal
pipeline is presenting opportunities for a robust growth in both run-the-business
(RTB) and discretionary activities. The company is pursuing more number of large
deals in terms of cumulative size vs this time last year. A healthy pipeline, broadbased deal signings, initial signs of up-turn in discretionary spending and good
traction in annuity, traditional and transformational business - all these factors
have collectively lent confidence to the company in estimating FY2015 to be a
better year than FY2014. TCS also indicated that it is reaping benefits of
investments in geographies such as Continental Europe and Latin America. The
Management, however, cited a word of caution on India business, which it expects
to remain muted till 1HFY2015 due to impending elections; although it sounded
confident of growing higher than the industry. It indicated that the company has a
robust demand pipeline across markets and the company sees a unique
opportunity to strategically partner and participate with clients.
For FY2015, the Management increased its gross hiring target to 55,000 from
50,000 given earlier. For FY2015, the company maintained its fresher hiring
target of 25,000. Even with aggressive hiring plans, the Management targets to
maintain its utilization levels excluding trainees at 80%+ going ahead. Over
FY2013-15E, we expect TCS revenue to post a CAGR of 16.5% in USD terms and
of 24.3% in INR terms. The company highlighted that it stands comfortable of
sustaining the EBIT margin in the range of 27-29%. On the EBIT and PAT fronts,
we expect the company to post a 28.0% and 26.8% CAGR over FY2013-15E,
respectively. At the current market price of `2,351, the stock is trading at 24.3x
FY2014E and 20.5x FY2015E EPS of `96.6 and `114.6, respectively. We maintain
our Accumulate rating on the stock with a target price of `2,520.
Exhibit 12: Key assumptions

FY2014
FY2015
Revenue growth (USD)
16.5
16.5
USD-INR rate (realized)
60.9
62.0
Revenue growth (`)
30.5
18.5
EBITDA margin (%)
30.8
30.2
Tax rate (%)
24.1
24.0
EPS growth (%)
35.6
18.6
January 17, 2014
Exhibit 13: Change in estimates

FY2014E
Parameter
(` cr)
FY2015E
Earlier
Revised
Variation
Earlier
Revised
Variation
estimates
estimates
(%)
estimates
estimates
(%)
Net revenue
82,399
82,169
(0.3)
95,466
97,331
2.0
EBITDA
25,493
25,339
(0.6)
29,456
29,408
(0.2)
PBT
24,901
25,164
1.1
30,063
29,682
(1.3)
Tax
6,095
6,061
(0.6)
7,365
7,124
(3.3)
PAT
18,639
18,920
1.5
22,584
22,446
(0.6)
Exhibit 14: One-year forward PE chart

2,400
2,100
1,800
(`)
1,500
1,200
900
600
300
0
Apr-07
Mar-08
Price
Feb-09
25x
Jan-10
21x
Dec-10
Nov-11
16x
Oct-12
Sep-13
11x
6x
Exhibit 15: Recommendation summary

Company
Reco
HCL Tech
Accumulate
Hexaware
CMP
Tgt. price
Upside
FY2015E
FY2015E
FY2012-15E
FY2015E
FY2015E
(`)
(`)
(%)
EBITDA (%)
P/E (x)
EPS CAGR (%)
EV/Sales (x)
RoE (%)
1,392
1510
8.5
24.8
14.5
38.5
2.2
26.8
Neutral
143
22.8
10.1
16.6
1.4
24.5
Infosys
Neutral
3,725
26.4
17.5
13.6
3.0
20.5
Infotech Enterprises
Neutral
347
19.1
11.8
26.5
1.1
17.9
KPIT Cummins
Neutral
173
16.3
10.5
27.2
0.9
19.8
Mindtree
Accumulate
1,496
1650
10.3
20.9
11.3
35.2
1.4
23.8
Mphasis
Accumulate
418
455
9.0
18.4
9.2
6.3
0.8
14.6
NIIT
Neutral
28
7.0
7.2
(16.1)
0.1
9.4
Persistent
Neutral
1,018
25.5
13.3
29.1
1.6
19.9
TCS
Accumulate
2,351
2,520
7.2
30.2
20.5
28.2
4.5
40.1
Tech Mahindra
Neutral
1,867
22.1
14.1
19.3
0.8
25.2
Wipro
Accumulate
570
600
5.2
23.1
15.8
16.8
2.3
21.4
January 17, 2014
Company background
TCS is Asia's largest IT services provider and is amongst the top 10 technology
firms in the world. The company has a global footprint with an employee base of
over 2.9lakh professionals, offering services to more than 1,000 clients across
various industry segments. The company has one of the widest portfolios of
services offerings, spanning across the entire IT service value chain from
traditional application development and maintenance to consulting and package
implementation to products and platforms.
January 17, 2014
Profit & Loss statement (Consolidated, IFRS)

Y/E March (` cr)
FY2011
FY2012
FY2013
FY2014E
FY2015E
Net sales
37,324
48,891
62,988
82,169
97,331
Cost of revenues
19,937
25,877
33,253
42,097
50,403
Gross profit
17,387
23,014
29,736
40,073
46,928
% of net sales
46.6
47.1
47.2
48.8
48.2
SGA expenses
6,189
8,599
11,648
14,734
17,520
% of net sales
16.6
17.6
18.5
17.9
18.0
11,198
14,415
18,088
25,339
29,408
% of net sales
30.0
29.5
28.7
30.8
30.2
Dep. and amortization
721
904
1079
1302
1557
1.9
1.8
1.7
1.6
1.6
EBITDA
% of net sales
EBIT
10,477
13,511
17,009
24,036
27,851
% of net sales
28.1
27.6
27.0
29.3
28.6
Other income, net
532
404
1118
1128
1832
Profit before tax
11,009
13,915
18,126
25,164
29,682
Provision for tax
2,174
3,169
4,034
6,061
7,124
% of PBT
PAT
Earnings in affiliates
Minority interest
Adj. PAT
Fully diluted EPS (`)
January 17, 2014
19.7
22.8
22.3
24.1
24.0
8,835
10,747
14,092
19,103
22,559
120
111
149
183
113
8,715
10,636
13,942
18,920
22,446
44.5
54.3
71.2
96.6
114.6
10
Balance sheet (Consolidated, IFRS)

Y/E March (` cr)
FY2011
FY2012
FY2013
FY2014E
FY2015E
Cash and cash equivalents
1,554
1,984
1,843
2,493
3,536
Other current financial assets
3,934
6,509
11,457
9,363
12,651
Accounts receivable
8,201
11,499
14,077
18,660
22,066
Unbilled revenues
1,349
2,248
3,160
4,052
4,800
Other current assets
1,449
Property and equipment
5,200
6,455
8,194
10,043
10,909
Intangible assets and goodwill
3,379
3,493
3,506
3,506
3,506
Investments
1,839
1,478
2,040
2,040
2,040
Assets
Other non-current assets

Total assets
2,575
32,788
41,199
52,074
60,672
73,291
5,834
6,806
8,751
11,072
13,257
33
11
101
101
101
100
100
100
100
100
Liabilities
Current liabilities
Short term borrowings
Redeemable preference shares
Long term debt
Other non-current liabilities
Minority interest
January 17, 2014
115
131
131
131
1,097
1,115
1,378
1,753
2,099
315
528
656
656
656
Shareholders funds
25,404
32,523
40,956
46,858
56,947
Total liabilities
32,788
41,199
52,074
60,672
73,291
11
Cash flow statement (Consolidated, IFRS)

Y/E March (` cr)
FY2011
FY2012
FY2013
FY2014E
FY2015E
15EPre-tax profit from oper.
10,477
13,511
17,009
24,036
27,851
721
904
1,079
1,302
1,557
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.
112
149
183
113
14,303
17,939
25,156
29,295
532
404
1,118
1,128
1,832
11,611
14,707
19,056
26,284
31,127
2,174
3,169
4,034
6,061
7,124
9,437
11,538
15,022
20,223
24,003
(2,391)
(3,298)
(2,578)
(4,583)
(3,406)
(148)
(899)
(912)
(892)
(748)
(3,255)
(1,127)
(4,948)
2,094
(3,288)
347
951
2,035
2,321
2,185
(5,448)
(4,373)
(6,403)
(1,061)
(5,257)
3,989
7,166
8,619
19,162
18,746
(Inc)/dec in fixed assets
(1,750)
(2,159)
(2,819)
(3,151)
(2,423)
(Inc)/dec in investments
5,597
361
(562)
(138)
(114)
(13)
(Inc)/dec in oth. current asst.

Inc/(dec) in current liab.
Net trade working capital
Cash flow from opert. actv.
(Inc)/dec in intangible asst.

(Inc)/dec in non-cur.asst.
(3,275)
(1,649)
(262)
(2,718)
(3,269)
Cash flow from invt. actv.
435
(3,561)
(3,656)
(5,869)
(5,692)
Inc/(dec) in debt
419
128
278
375
346
Inc/(dec) in equity
328
1,979
(1,159)
(3,852)
(2,273)
Inc/(dec) in minority int.
(62)
213
129
Dividends
(4,580)
(5,496)
(4,351)
(9,166)
(10,083)
Cash flow from finan. actv.
(3,895)
(3,176)
(5,103)
(12,643)
(12,011)
Cash generated/(utilized)
January 17, 2014
120
11,078
529
430
(140)
650
1,043
Cash at start of the year
1,025
1,554
1,984
1,843
2,493
Cash at end of the year
1,554
1,984
1,843
2,493
3,536
12
Key ratios
Y/E March
FY2011
FY2012
FY2013
FY2014E
FY2015E
P/E (on FDEPS)
52.8
43.3
33.0
24.3
20.5
P/CEPS
48.8
39.9
30.6
22.8
19.2
P/BVPS
18.1
14.2
11.2
10.0
8.2
Valuation ratio(x)
Dividend yield (%)
1.0
0.9
0.8
0.9
0.9
EV/Sales
12.1
9.2
7.1
5.4
4.5
EV/EBITDA
40.4
31.2
24.6
17.6
15.0
EV/Total assets
13.8
10.9
8.5
7.5
6.1
Per share data (`)
EPS
44.5
54.3
71.2
96.6
114.6
Cash EPS
48.2
59.0
76.8
103.3
122.6
Dividend
23.4
20.0
19.0
22.0
22.0
Book value
130
166
209
235
286
Dupont analysis
Tax retention ratio (PAT/PBT)
0.8
0.8
0.8
0.8
0.8
Cost of debt (PBT/EBIT)
1.1
1.0
1.1
1.0
1.1
EBIT margin (EBIT/Sales)
0.3
0.3
0.3
0.3
0.3
Asset turnover ratio (Sales/Assets)
1.1
1.2
1.2
1.4
1.3
Leverage ratio (Assets/Equity)
1.3
1.3
1.3
1.3
1.3
34.8
33.0
34.4
41.6
40.3
Operating ROE
Return ratios (%)
RoCE (pre-tax)
32.0
32.8
32.7
40.2
38.5
Angel RoIC
41.1
43.3
46.3
51.4
50.6
RoE
34.3
32.7
34.0
41.2
40.1
Asset turnover (fixed assets)
7.2
7.6
7.7
8.2
8.9
Receivables days
80
86
82
83
83
Turnover ratios(x)
January 17, 2014
13
Research Team Tel: 022 - 3935 7800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
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sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
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latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may
have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
TCS
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
January 17, 2014
Buy (> 15%)

Reduce (-5% to -15%)
Accumulate (5% to 15%)

Sell (< -15%)
Neutral (-5 to 5%)
14

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3QFY2014 Result Update | IT

January 17, 2014

Tata Consultancy Services (TCS)

Source: Company, Angel Research

Net debt (` cr)

52 Week High / Low

Avg. Daily Volume

Face Value (`)

Shareholding Pattern (%)

MF / Banks / Indian Fls

FII / NRIs / OCBs

Indian Public / Others

Key financials (Consolidated, IFRS)

Source: Company, Angel Research; Note: CMP as of January 16, 2014

Please refer to important disclosures at the end of this report

TCS | 3QFY2014 Result Update

Exhibit 1: 3QFY2014 performance (Consolidated, IFRS)

Dep. and amortization

Gross margin (%)

EBITDA margin (%)

EBIT margin (%)

PAT margin (%)

Source: Company, Angel Research

Exhibit 2: Actual vs Angel estimates

Source: Company, Angel Research

Inline operating results

January 17, 2014

TCS | 3QFY2014 Result Update

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

Revenue growth (USD terms)

Source: Company, Angel Research

Exhibit 4: Revenue drivers for 3QFY2014

Offshore effort shift

Total revenue growth

Source: Company, Angel Research

January 17, 2014

TCS | 3QFY2014 Result Update

Exhibit 5: Revenue growth (Industry wise)

Lifesciences and healthcare

Retail and distribution

Travel and hospitality

Energy and utilities

Media and entertainment

Source: Company, Angel Research

Exhibit 6: Revenue growth (Service wise)

IT solutions and services

Engg. and industrial services

Source: Company, Angel Research

January 17, 2014

TCS | 3QFY2014 Result Update

Exhibit 7: Revenue growth (Geography wise)

Source: Company, Angel Research

Hiring spree continues

Exhibit 8: Hiring and attrition trend

Attrition (%) - LTM basis

For 3QFY2014, the utilization level - excluding as well as including trainees,

Exhibit 9: Trend in utilization

Source: Company, Angel Research

January 17, 2014

TCS | 3QFY2014 Result Update

Margins decline slightly

Exhibit 10: Margin profile