Company Profile-Templet

Dr. Himanshu Jain

PIET
TATA Consultancy Services Limited
May 26th, 2020
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Company Profile
 Business Description

◼ TATA Consultancy Services Limited (TCS) is the biggest Indian multinational information technology (IT)
service and consulting company. It is a subsidiary of Tata Group.
◼ TCS and its 67 subsidiaries provides a wide range of information technology-related products and services
including application development, business process outsourcing, capacity planning, consulting, enterprise
software, hardware sizing, payment processing, software management and technology education services.
◼ The firm's established software products are TCS BaNCS and TCS MasterCraft.
◼ TCS operates in 149 locations across 46 countries with 4,48,464 employees (March 2020).
◼ Incorporation Place: India; Accounting Firm: B S R & Co., LLP(1)
◼ Incorporated: 1968; Headquartered: in Mumbai, Maharashtra, India.

____________________
Source: Company website, Company filings, Factset
(1) Contract with B S R & Co. would run upto December 31, 2020
Last 5 Years Share Price Performance
Share Price @ Jun 05, 2020, 16:00 Rs. 2048.10 Financial Year
Share Outstanding: 1914m FY19 FY20 FY21 E
Equity Value: Rs. 84,126 Cr EV/Sales 6.02x 5.17x 4.94x
Net Debt: Rs. 440 Cr EV/EBITDA 17.40x 14.94x 12.24x
Enterprise Value: Rs. 6.78T P/E 24.1x 23.43x 22.98x

https://www.equitymaster.com/share-price/TCS/TCS-532540/TCS-Share-
Price?utm_source=CompInfoPage&utm_medium=Website&utm_campaign=stockquote&utm_content=TCS
https://www.moneycontrol.com/india/stockpricequote/computers-software/tataconsultancyservices/TCS
Key Financials

Financial Year Ending 31 March 2020

(Rs. Crore) 2019A 2020E 2021E 2022E
Revenue 1,46,463 1,56,949 1,68,394 1,81,678
% Growth - 7.16% 7.29% 7.89%
EBITDA 39,506 43,372 47,361 50,247
% Margin 27% 27.63% 28.13% 27.65%
EBIT 41,761 43,172 48,971 51,657
% Margin 27.51% 29.08% 28.43%
26.61%
Net Income 30,065 32,087 37,326 40,658
% Margin 20.53% 20.44% 22.17% 22.38%
Net Debt (327) N.A N.A N.A
Net Debt/EBITDA (0.0083x) N.A N.A N.A
 Tata Consultancy Services
Company Overview (Cont’d)

____________________
Source: Company website, Factset
 Board and Management

Name Title
N Chandrasekaran Chairman
Rajesh Gopinathan CEO & Managing Director
N G Subramaniam COO & Executive Director
V Tamakrishnan CFO
Milind Lakkad Global Head-Human Resources
Ravi Viswanathan Chief Marketing Officer
K Ananth Krishnan Chief Technology Officer
Madhav Anchan General Counsel
Rajendra Moholkar Company Secretary

____________________

Source: Company website, Factset

 Recent Key Development

◼ October 2019: TCS launches blockchain-based multi-brand customer loyalty platform on

R3's corda. Tata Consultancy Services Ltd - announced launch of blockchain-based multi-
brand customer loyalty platform using R3's corda.
◼ June 2019: Tata Consultancy Services Ltd hikes stake in JV with Mitsubishi Corporation.
Tata Consultancy Services -following the stake hike, TCS will hold 55% Equity in TCS
Japan, up from 51%, Tata Consultancy Services - Company, Via TCS APAC, is buying 15%
stake from MC in Tata Consultancy Services Japan, For $32.6 Million.
◼ May 2019 TCS to partner with juniper networks' to enhance product assurance process
with ai and automation.
◼ April 2019: Tata Consultancy Services Ltd co-partners with google cloud to build
industry-specific cloud solutions.
◼ April 2019: Canada's Food and Pharmacy Co Loblaw successfully deployed Co's
Cognitive Automation Software, IGNIO.
◼ Feb 2019: Bahrain selects TCS BANCS for insurance as its core digital platform.

____________________

Source: Company website, Factset

Shareholding Pattern
No. Top 10 Shareholders No. of Shares % O/s
1. Tata Sons Private 2,70,24,50,947 72.02
2. Life insurance Corporation of India 15,24,93,927 4.1
3. SBI Mutual Fund 2,16,80,561 0.6
4. First State Investments ICVC- Stewart Investors Asia Pacific Leaders Fund 1,50,54,489 0.8
5. Government of Singapore 64,97,754 0.3
6. Oppenheimer Developing Markets Fund 79,96,009 0.4
7. ICICI Prudential Life Insurance Company Ltd 38,86,141 0.2
8. Axis Mutual Fund Trustee Limited 40,55,256 0.2
9. Abu Dhabi Investment Authority 62,96,384 0.3
10. Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard 75,95,080 0.4
International Equity Index Funds
Total Top 10 Shareholders 2,92,80,06,548 79.32

____________________

Source: Company website, Factset

Shareholding Pattern
Financial Institutions
5%
General Public
3%

Others
1%
Central Govt
0%
N Banks Mutual Funds
3%

Foreign Institutions Promoters

16% 72%

____________________

Source: Company website, Factset

 Tata Consultancy Services
Market Overview

____________________
Source: Bloomberg, Factset, Wall Street Research
Broker Estimates
Broker Date Analyst Target Recommendation

9-May-20 Mr. Akhilesh 2080 Hold

17-Apr-20 Ms. Himanshu 1680 Reduce

17-Apr-20 Mr. Vaid 2055 Hold

17-Jan-20 Mr. Nain 2300 Hold

20-Jan-20 Mr. Saurabh 2320 Hold

8,879
https://front.page/tcs/share-price-target
 Recent Broker Views

“TCS reported disappointing set of numbers, with revenue growth significantly below estimates. Major
segments of BFSI, retail and manufacturing remained weak, so did the US geography,” said Phillip
Capital.
Phillip Capital, Oct 12, 2019

“Management comments suggest limited visibility in the near term, so we have lowered the target
multiple to 21times from 22 times given the growth and profitability challenges.”

Citibank India
 Sample of other Companies
“We are by and large comfortable with the company’s response. The company’s
explanation on the Able Delight acquisition appears reasonable (especially when
considering the unit’s state of operation immediately prior to the acquisition, the
large back order, and the business reshuffling since the acquisition), and the
Hanwei purchase also does not appear to be self-dealing. In our opinion, while
there are certainly areas that the company can and should improve upon,
particularly with regard to internal control and timely disclosure…We are
maintaining our Market Outperform rating and $21 price target on the shares
of China Valves. We continue to view the company as a fast growing enterprise
with solid fundamentals and strong business prospects. Our price target is based
on the shares trading at 13x our 2011 EPS estimate of $1.64”

Rodman & Renshaw Equity Research, 18 January 2011

“Shares of CVVT currently trade at 5.3x our 2011 adjusted EPS estimate of $1.30
(excludes $0.21 benefit from favorable supply relationship). Our channel checks
indicate that mainland and HK private equity firms have been actively looking at
companies within the US-listed China sector where valuations of many such
companies are below that of their private Chinese counterparts…Based on
observations of other stocks that have come under scrutiny, we believe CVVT
shares will remain under pressure until the company updates/clarifies disclosures as
necessary and engages a top-tier auditor…Our $15 price target is based on a
10.0x multiple applied to our 2011 EPS estimate of $1.51…We believe
improvements in the company's transparency, corporate governance, and internal
controls are prerequisites for shares of CVVT to trade at a global industrial sector
multiple (approximately 15x NTM earnings).”

Roth Capital Partners, LLC, 18 January 2011

 Sample of other Companies

0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
No of
Brokers
4

Feb-10 100.0%
5

Mar-10 100.0%
5

Apr-10 100.0%

Buy
5

May-10 100.0%
Broker Recommendations

Jun-10 100.0%

Hold
5

Jul-10 100.0%
5

Aug-10 100.0%
Sell
5

Sep-10 80.0% 20.0%

5

Oct-10 60.0% 40.0%

4

Nov-10 100.0%
Share Price
4

Dec-10 100.0%
4

Jan-11 100.0%
4

Feb-11 100.0%
Target Price
5.0
Price
(US$)

10.0
15.0
20.0
25.0
30.0
 Tata Consultancy Services
Company Overview (Cont’d)

____________________
Source: Company website, Company filings,
(1) As of March 2020
 Companies Acquired
Employees
Name Acquisition date Activities Price
(at acquisition)

CMC Limited 2001 October IT Services $33.9 m 3,102

Airline Financial Support Services India
2004 January BPO $5.1 m 400
(AFSI)
Aviation Software Development
2004 March IT Services $3.1 m 180
Consultancy India (ASDC)
Phoenix Global Solutions 2004 May BPO $130 m 400

Swedish Indian IT Resources AB (SITAR) 2005 May IT Services $4.8 m n/a

Pearl Group 2005 October Insurance $94.7 m 950

Core Banking
Financial Network Services (FNS) 2005 October $26 m 190
Product
Comicrom 2005 November Banking BPO $23 m 1,257
 Companies Acquired …
Employees (at
Name Acquisition date Activities Price
acquisition)

Tata Infotech 2006 February IT Services $259.2 m 3,600

TCS Management 2006 November IT Services $13 m 35
TKS-Teknosoft 2006 November Banking Product $80.4 m 115
Captive BPO
Citigroup Global Services Limited 2008 December $512 m 12,472
of Citigroup Inc.

Captive IT/BPO
Supervalu Services India 2010 September unit of Supervalu $100 m 600
Inc. in India

High Performance
Computational Research Laboratories 2012 August $34 m 80
Computing
Alti SA 2013 April IT Services $97.5 Mn 1200
Management
BridgePoint Group 2018 November NA NA
consulting
 Employee Count & Attrition (IT Services)

450000 16.00%
424000
14.70% 395000
400000 387000
13.80% 14.00%
354000
350000
320000 12.00%
11.30%
300000
11.00% 10.00%
10.50%
250000
8.00%
200000
6.00%
150000

4.00%
100000

50000 2.00%

0 0.00%
FY15 FY16 FY17 FY18 FY19

Total Headcount Attrition(IT Services)

____________________
Source: Company website, Company filings, Factiva
(1) As of March 31, 2020
 Geographic Presence

____________________
Source: Company website