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    TCS   INE467B01029

TATA CONSULTANCY SERVICES LTD.

(TCS)
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Tata Consultancy Services : Strong Revenue Growth and Margin Expansion Mark TCS Q2

10/08/2020 | 05:47am EDT

Strong Revenue Growth and Margin Expansion Mark TCS Q2.

Q2 Revenue +4.8% QoQ in CC, +7.2% in USD, +4.7% in INR

Growth led by BFSI (+6.2% QoQ) and Retail (+8.8% QoQ)

Salary Increases to be Rolled Out, Effective October 1st

Industry-leading Operating Margin at 26.2%*

Very Strong Deal Closures: Total Contract Value of $8.6 Bn

Board Announces $2.18 Bn buyback

Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading global IT services, consulting and business solutions organization, reported its consolidated financial results according to Ind AS and IFRS, for the quarter ending September 30, 2020.

Highlights of the Quarter Ended September 30, 2020

Revenue at $5.424 Bn, +7.2% QoQ, -1.7% YoY

Constant Currency revenue growth: +4.8% QoQ, -3.2% YoY

Net Income at $1.14 Bn*, +23.4% QoQ, +0.2% YoY

Operating Margin expands 2.2% YoY to 26.2%*; Net Margin at 21%*

Strong Cash Conversion: Net Cash from Operations at $1.44 Bn | 125.9% of Net Income*

Consolidated headcount: 453,540 | Net addition: 9,864 | Women in the workforce: 36.4%

352K+ employees trained in new technologies; 427K+ on Agile methods

Already a global benchmark, IT Services attrition rate hits an all-time low at 8.9% LTM

Capital Allocation:

Interim Dividend per share: '12.00 | Record date 15/10/2020 | Payment date 03/11/2020

The Board has approved a proposal to buy back up to 5,33,33,333 equity shares of TCS, being 1.42% of the total paid up equity share capital, at '3,000 per equity share for an aggregate amount not exceeding '16,000 crore (excluding taxes and related expenses), on proportionate basis under the tender offer route using the stock exchange mechanism, subject to approval of the members by means of a special resolution through a postal ballot.

Excludes provision of $165 Mn towards legal claim

Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: 'Driving accelerated business value realization of our customers' digital investments has resulted in broad-based revenue growth. The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future.'

He added: 'What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, we will see the native capabilities of these platforms being utilized to create innovative new business models and differentiated customer experiences. Our investments in building deep expertise on these platforms, in research and innovation and in industry-specific solutions leveraging our contextual knowledge, position us very strongly to benefit fully from this secular demand driver.'

N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: 'Our all-round performance this quarter is a huge endorsement of the increased relevance of our services and solutions to our clients as they pivot from risk mitigation to long-term resilience powered by cloud, digital and simplification of working methods. Clients are partnering us to leverage our thought leadership in SBWS, Vision 25 x 25 and Location Independent Agile to build a resilient, adaptable and future-proof operating model.'

He added: 'Accessibility and Touchless are becoming important attributes for solution design, and our products and platforms continue to gain traction. Besides core systems transformation, our Quartz Blockchain Solution is the choice of a leading bank and a market infrastructure player for inter-bank lending, crypto assets and for enabling real-time settlements.'

V Ramakrishnan, Chief Financial Officer, said: 'We have always maintained that growth is the best margin lever, and that is very evident in our numbers this quarter. It is very gratifying to see every financial metric precisely where we would like it to be, with a stellar operating margin despite neutral currency, strong cash conversion, and lowest ever DSO. We continue to invest in our people and are doubling down on building newer capabilities to power the next leg of our growth and market share expansion.'

IFRS Financial Statements

Consolidated Statements of Comprehensive Income

For the three-month periods ended September 30, 2019, and September 30, 2020

(In millions of $, except per share data)

Three-month period ended September 30, 2019

Three-month period ended

September 30, 2020

Ex Adj*

Reported

Revenue

5,517

5,424

5,424

Cost of revenue

3,264

3,205

3,205

Gross margin

2,253

2,219

2,219

SG & A expenses

927

797

962

Operating income

1,326

1,422

1,257

Other income (expense), net

166

101

101

Income before income taxes

1,492

1,523

1,358

Income taxes

350

378

342

Income after income taxes

1,142

1,145

1,016

Non-controlling interests

3

4

4

Net income

1,139

1,141

1,012

Earnings per share in $

0.30

0.30

0.27

Consolidated Statements of Financial Position

As of March 31, 2020, and September 30, 2020

(In millions of $)

As of March 31,

2020

As of September 30, 2020

Assets

Property and equipment

1,583

1,610

Right-of-use Assets

1,060

1,044

Intangible assets and Goodwill

547

577

Accounts Receivable

4,057

3,836

Unbilled Revenues

1,398

1,358

Investments

3,494

4,961

Cash and Cash equivalents

1,146

860

Other current assets

1,976

3,095

Other non-current assets

1,048

1,026

Total Assets

16,309

18,367

Liabilities and Shareholders' Equity

Shareholders' Funds

11,433

13,180

Other current liabilities

3,587

3,921

Other non-current liabilities

1,204

1,178

Non-controlling interests

85

88

Total Liabilities

16,309

18,367

*excludes legal claim provision (refer note 19 to Financial Statements)

About Tata Consultancy Services Ltd (TCS)

Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for over 50 years. TCS offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. This is delivered through its unique Location Independent AgileTM delivery model, recognized as a benchmark of excellence in software development.

A part of the Tata group, India's largest multinational business group, TCS has over 453,000 of the world's best-trained consultants in 46 countries. The company generated consolidated revenues of US $22 billion in the fiscal year ended March 31, 2020, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. TCS' proactive stance on climate change and award-winning work with communities across the world have earned it a place in leading sustainability indices such as the Dow Jones Sustainability Index (DJSI), MSCI Global Sustainability Index and the FTSE4Good Emerging Index. For more information, visit us at www.tcs.com.

To stay up-to-date on TCS global news, follow @TCS_News.

For more information please contact:

Media: +91 22 6778 9999

Investor Relations: 91 22 6778 9999

arushie.sinha@tcs.com

Kedar.shirali@tcs.com

(C) 2020 Electronic News Publishing, source ENP Newswire

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Financials
Sales 2022 1 907 B 25 639 M 25 639 M
Net income 2022 394 B 5 293 M 5 293 M
Net cash 2022 431 B 5 788 M 5 788 M
P/E ratio 2022 30,2x
Yield 2022 2,34%
Capitalization 11 884 B 160 B 160 B
EV / Sales 2022 6,00x
EV / Sales 2023 5,31x
Nbr of Employees 488 649
Free-Float 27,8%
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Tata Consultancy Services Ltd. Technical Analysis Chart | TCS | INE467B01029 | MarketScreener
Technical analysis trends TATA CONSULTANCY SERVICES LTD.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 37
Last Close Price 3 212,85 INR
Average target price 3 485,69 INR
Spread / Average Target 8,49%
EPS Revisions
Managers and Directors
Rajesh Gopinathan CEO, MD & Non-Independent Executive Director
Samir Seksaria Chief Financial Officer
Natarajan Chandrasekaran Non-Executive Chairman
K. Ananth Krishnan Chief Technology Officer
N. Ganapathy Subramaniam COO & Non-Independent Executive Director
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