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Fundamental Analysis of TCS

The document provides a fundamental analysis of Tata Consultancy Services (TCS). It begins with an overview of TCS, noting that it is one of the largest IT service providers in India and worldwide. Next, it analyzes TCS's financials. It finds that TCS has a high return on equity, maintained a similar debt level in 2020 compared to 2019, and improved capital turnover. The analysis recommends TCS as a good long-term investment based on its strong financial ratios and management.

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1K views4 pages

Fundamental Analysis of TCS

The document provides a fundamental analysis of Tata Consultancy Services (TCS). It begins with an overview of TCS, noting that it is one of the largest IT service providers in India and worldwide. Next, it analyzes TCS's financials. It finds that TCS has a high return on equity, maintained a similar debt level in 2020 compared to 2019, and improved capital turnover. The analysis recommends TCS as a good long-term investment based on its strong financial ratios and management.

Uploaded by

pravin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

DISCLAIMER M

MPMC TRADERS

FUNDAMENTAL ANALYSIS OF TCS

ABOUT TCS

 Tata Consultancy Services or TCS is one of the largest IT service providers of India and

the world.

 This is a separate entity of Tata Group for the Information Technology services.

 The company has come a long way to become one of the largest and growing companies

in the world.

 TCS has consolidated the subsidiaries of the company under the same umbrella.

 The companies like Computational Research Laboratories, TCS e-Serve and Retail Full

Serve are now integrated part of the TCS.

 The different subsidiaries are majorly into Banking, Finance, and Insurance industry.

 TCS is the second largest employer of India after Coal India Ltd and the largest in the IT

Services.

 TCS has achieved the highest rank for the IT service company in the Forbes World’s

Most Innovative companies.

 It is also the first time that any company from India has featured in the list.

 TCS is the largest IT service company of India.

 TCS market cap of Rs 1044513.81 crores

FINANCIAL ANALYSIS
 Financial analysis of TCS shows that it is a very well managed company that has given

good return on equity in 2020 compared to 2019. Return on equity is 44.7% in Financial

year 2020 compared to 38.1% in Mar 2019.

 Financial structure ratio shows that TCS has almost kept the funding through debt at the

same level in 2020 as in 2019.

 The capital turn over has improved considerably for TCS showing that for every rupee

invested, it is getting more sales in 2020 than in 2019. It has increased from 1.66 to 1.72.

 Return on investment ratio is constant at 0.55. This is very good return on investment.

 Operating Profit margin has decreased a little in 2020 compared to 2019 by around 1%.

This is marginal .

Recommendation: Overall a very good long-term investment.


FINANCIALS

Year Mar 2020 Year Mar 2019

Return on equity

Earning After Tax 33,260.00 30,065.00

Owner's Equity 74,368.00 78,898.00

0.44723537 0.381061624

Tax Effect Ratio

Earning After Tax 33,260.00 30,065.00

Earning Before Tax 41,991.00 40,705.00

79.20744922 73.86070507

Financial Structure Ratio

Invested Capital 75,923.00 73,958.00

Owner's Equity 74,368.00 78,898.00

1.020909531 0.937387513

Capital Turnover Sales 1,31,306.00 1,23,170.00

Invested Capital 75,923.00 73,958.00

1.729462745 1.665404689

Operating Profit margin

EBIT 41,991.00 40,705.00


Sales 1,31,306.00 1,23,170.00

0.319794983 0.330478201

Return on Investment

EBIT 41,991.00 40,705.00

Invested Capital 75,923.00 73,958.00

0.553073509 0.550379945

Technically the price targets are as under:

Share Buy Target 1 Target 2 Stop Loss Time Frame


TCS 2800 2910 3200 2667 2 months

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