MARKET CAP

₹ 13,78,763 CR
CURRENT MARKET PRICE
₹ 3,811

RESEARCH REPORT AS ON JUNE 2024

BY- SAMBHAV LALWANI

JUNIOR ANALYST
PEE AAR SECURITIES
 ABOUT THE COMPANY

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 56 years.

Its consulting-led, cognitive powered, portfolio of business, technology and

engineering services and solutions is delivered through its unique Location
Independent Agile™ 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
601,000 of the world’s best-trained consultants in 54 countries. The company is listed
on the BSE and the NSE in India.

TCS is the second-largest Indian company by market capitalization, the most

valuable IT service brands worldwide, and the top Big Tech (India) company.

Key Offerings of TCS are:

1. IT Services: Application Development, Systems Integration, IT Infrastructure, Digital
Transformation.
2. Business Solutions: ERP, CRM, SCM, Business Process Outsourcing.
3. Digital and Technology Services: Cloud Computing, AI & Machine Learning, IoT,
Blockchain, Cyber Security.
 HISTORY
Tata Consultancy Services (TCS) has a rich history that reflects its growth
from a regional IT service provider to a global leader in technology and
business solutions. Here is a brief overview of the key milestones in TCS's
history:

1968: TCS was founded by Tata Sons and established as a division of Tata
Group. It started as a management and technology consultancy focused on
providing computer services to Tata Group companies.

1969: TCS's first project involved automating the inter-branch reconciliation

system for the Central Bank of India.

1971: The company ventured into software development and exported its first
software project to an American client, a milestone in India's IT export
history.

1980: TCS introduced its offshore delivery model, which became a

cornerstone of its business strategy.

1993: TCS became the first Indian company to develop and release a
commercial product, MasterCraft, a software engineering and project
management tool.

2004: TCS went public with an initial public offering (IPO) on the Bombay
Stock Exchange (BSE) and National Stock Exchange (NSE) in India.

2005: TCS became the first Indian IT services company to cross the $2 billion
revenue mark.

2018: TCS crossed the $100 billion market capitalization mark, making it one
of the most valuable IT services companies globally.
From its inception in 1968 to becoming a global IT powerhouse, TCS
has consistently focused on innovation, customer-centric solutions,
and global expansion. Its history is marked by significant milestones
in technology development, market expansion, and strategic
acquisitions, establishing TCS as a leader in the IT and business
solutions industry.
MEET OUR TEAM

K. Krithivasan is the Chief Executive Officer and

Managing Director of Tata Consultancy Services
(TCS).In his prior role, Krithi was the Global Head of
Banking, Financial Services, and Insurance (BFSI)
Business Group.Krithi has a bachelor’s degree in
Mechanical Engineering from the University of Madras
and a master’s degree in Industrial and Management
Engineering from IIT Kanpur.

Mr. Samir Seksaria took over as the CFO of Tata

Consultancy Services on 1st May 2021. Prior to this role,
he was heading the Business Finance function for TCS.
In his former role, he was responsible for the financial
management of the company’s individual operating
units.Samir graduated in 1997 from Narsee Monjee
College in Mumbai, and completed his Chartered
Accountancy from ICAI, Mumbai.

Milind Lakkad is the Executive Vice President and

CHRO in TCS since May 2019. Prior to taking this role,
he was the Global head of Manufacturing Business
Group since 2008.
INDUSTRY OVERVIEW
The India ICT Market size was estimated at USD 273.50 billion in the
current year and is expected to reach USD 421.59 billion in five years,
registering a CAGR of 9.04% during the forecast period. Source:

The ICT market is estimated based on IT hardware, software, and services

supplied by organizations in the country. With India's digital transformation,
the Indian information technology market has become more diverse

Digital technologies are emerging as a game changer for every sector of

India's economy, driven by digital capabilities increasing and connectivity
becoming universal. Developing a digital infrastructure is fundamental for
countries to move their digital value chains.

The Government of India is driven to establish favorable policy and regulatory

environments for the ongoing expansion of 5G, Internet of Things (IoT),
Artificial Intelligence (AI), Cloud Technology, Blockchain and Machine-to-
Machine (M2M), and many more sectors as a result of the ICT sector's rapid
growth in India and its substantial contribution to the socioeconomic
development of the nation.

The Intensity of competitive rivalry is expected to be high in the Indian ICT

market, as several key players in the ICT market are constantly trying to bring
advancements. A few prominent companies are entering into collaborations
and are expanding their footprints in developing regions to consolidate their
positions in the market. The major players are Tata Communications, HCL
Technologies, and Infosys Limited, among many others.

The Indian ICT market is divided into organized and unorganized sectors. The
organized sector consists of well-established companies with structured
operations, regulatory compliance, and significant market presence. The
unorganized sector comprises smaller entities, often with less formal business
structures and limited market reach. Organized Sector accounts
Approximately 65-70% & Unorganized Sector accounts Approximately 30-35%
of the Indian ICT market.
 MARKET SHARE
Global IT Services Market: TCS is among the top IT services providers
worldwide. As of recent reports, TCS holds about 3-4% of the global IT services
market, which is substantial given the fragmented nature of this market.

Indian IT Services Market: In India, TCS is a dominant player. The company's

market share in the Indian IT services sector is significantly higher, estimated
to be around 25-30%, considering the size and scope of its operations relative
to other Indian IT service providers.

TCS's revenue provides a strong indicator of its market position. For example,
TCS reported revenues of approximately USD 25 billion for the fiscal year 2023,
highlighting its significant footprint in the industy.

The CAGR of TCS over the period from FY 2018 to FY 2023 is approximately
5.52%. TCS has 51 subsidaries spread throughout the globe.

TCS offers a wide range of products and services catering to a wide customer
base across various industries it includes:

Products and Platforms

TCS ADD™
TCS BaNCS™
TCS BFSI Platforms
TCS CHROMA™
TCS Customer Intelligence & Insights™
TCS ERP on Cloud
ignio™ Opens in new tab
TCS HOBS™
TCS Intelligent Urban Exchange™
 TCS OmniStore™
TCS Optumera™
TCS TAP™
Quartz™ – The Smart Ledgers™
TCS TwinX™
TCS MasterCraft™
Jile™ Opens in new tab
TCS iON™

Services
Artificial Intelligence
Cloud
Cognitive Business Operations
Consulting
Cybersecurity
Data and Analytics
Enterprise Solutions
IoT and Digital Engineering
Sustainability Services
Network Solutions and Services
TCS Interactive
TCS and AWS Cloud
TCS Enterprise Cloud
TCS and Google Cloud
TCS and Microsoft Cloud

TCS also provides tailored solutions for various industries

These products and services illustrate TCS's comprehensive approach

to addressing the diverse needs of its global client base, leveraging
technology and innovation to drive business value.
 MAJOR CLIENTS
Banking and Financial Services:
Citibank
Bank Of America
JP Morgan Chase

Insurance:
Prudential Financial
AIG (American International Group)

Retail and Consumer Goods:

Walmart
Marks and Spencer

Telecommunications:
Verizon
BT group

Manufacturing:
General Motors
Siemens

Healthcare and Life Sciences:

AstraZeneca
Johnson & Johnson
Travel, Transportation, and Hospitality:
Airbus
Marriott International

Energy, Resources, and Utilities:

ExxonMobil
Shell

Government and Public Service:

UK Government
Indian Government
 SWOT ANALYSIS
Strengths of TCS

Broad client base: TCS caters to a broad range of audiences from

Industries like entertainment banking, financial services, media services,
and telecommunication. The company has also worked with many
industry giants and has helped them implement their digital presence
across the globe. By expanding and bringing diverse services to its plate,
TCS can easily loosen the risk of being reliant on a specific industry.

Expanded global reach: The worldwide reach of TCS extends from the UK,
Africa, Europe, North America, and the Asia Pacific regions. This
showcases the consistent efforts of the company to acquire as many
areas as possible. It has helped the company to stretch its presence and
solidify its global position.

Varied service portfolio: TCS has a decentralized portfolio including

various services like business intelligence, application development, IT
infrastructure, and better maintenance of business process services. A lot
of business clients attract such effective portfolios and make respective
collaborations.

High return on investment: With all the strengths the company has, TCS
successfully implements its new projects as well as ventures. It helps
generate high returns on capital expenditure resulting in the company’s
exponential growth across the globe.

Strong collaborations: TCS has established successful connections with

numerous multinational companies including HP, Dell, Amazon, Bosch,
etc. The company provides technical and strategic sustainable solutions
to its clients through its different collaborations and partnerships.
Weaknesses of TCS
TCS has the following weaknesses that come under the SWOT analysis.

Legal complexities: In 2014, TCS and Epic Systems had a legal dispute and
the company was accused of inappropriate use of confidential corporate
information. In 2016, TCS was hit for its repetition and was proven guilty
with a safety amount of penalty. This amount was a staggering $900
million in damages. The company however disagreed and ignored the
court decision which harmed the company’s reputation.

Sharp fall in performance: TCS subsidiary, Diligenta performed poorly

continuously in its financial reports. As the company was not efficient
enough to perform well, the bottom line of TCS couldn’t rise quickly. This,
however, tarnished the company’s overall performance.

Tata Consultancy Services needs to be more agile to compete with the

giants as well as companies that are developing specialized IT solutions
and operations landscapes.

Opportunities of TCS
Below are the major opportunities that TCS holds.

Mobility solutions: The digital space is evolving continuously and has

increased the use of mobile phones as well as digital gadgets. TCS is an
available position company and has got the opportunity to leverage this
emerging digital age. The progress of business applications is given extra
attention by the company. These applications are really expected to be
the primary driving force behind the mobility solutions for different
companies.

M2M solutions: Tata Consultancy Services has made provision for M2M
solutions including wired and wireless communication media. The
company leverages the emerging opportunities in this field. TCS offers a
range of machine-to-machine solutions and services with increasing
demands.
Demand for cloud-based computing: TCS has a very strong cloud-
based infrastructure that is all set to benefit from the demand developed
for the services. Today, the industry is moving towards cloud-based
solutions and hints demand innovation as well as the speed of digital
transformation.

Digital transformation: Today, the world is becoming more digital and

companies are forced to change their digital economy. The company’s
primary goal is to transform and deliver digital solutions and expects
more expenditure on technology for the evolution.

Threats to TCS
TCS faces major threats like intense competition, legal complexities, etc.

Severe competition: The competition in the IT industry is becoming more

tough. The market share of TCS is very limited so the constant price
issues remain. Big IT companies like Accenture, Infosys, Deloitte
Capgemini, etc. are playing a major role in the IT industry with the same
efforts. TCS should continuously develop better and new solutions for its
clients to overcome the intense competition.

Legal issues: Continuously, changing legal rules in unions and countries

can disturb the company’s functionalities. This can impact the profit and
revenue of TCS.

Higher turnover rate: TCS undergoes particular attrition that harms its
repetition and brand image. It ultimately increases the expense of
upgrading the skill sets of new employees and instilling leadership
qualities.
KEY RATIOS
BALANCE SHEET
PROFIT & LOSS
SHAREHOLDING
 FINANCIALS
As of March 2024, company’s promoter held 71.77% stake in Tata
Consultancy Services, with no shares having been pledged.

Over the last one year, Tata Consultancy Services share price has
moved up from Rs.3215.45 to Rs.3838.45 registering a gain of Rs.623
which is around 19.76%.

EBITDA stands at Rs.17,075 Cr in March 2024 which is up by 8.26% from

Rs.15,663 Cr in March 2023.

Net profit has increased from Rs.11,436 Cr in March 2023 to Rs.12,502 Cr in

March 2024 which is a gain of approximately 8.52%. This was due to a
number of factors including-

Despite achieving a robust order book and maintaining strong demand

for their services, TCS faced challenges in converting these into
significant revenue growth. The global economic environment and
varying client spending patterns impacted the overall growth rate.
Additionally, the macroeconomic environment influenced IT spending,
leading to cautious expenditure by clients​

TCS continued to invest heavily in new technologies and workforce

development, including a significant focus on generative AI and other
emerging technologies. These investments, while crucial for long-term
growth, added to the operational costs and affected short-term
revenue growth. The company also rolled out salary increases and
made other employee-related investments, impacting margins.

Certain sectors like Life Sciences and Healthcare, and Manufacturing

showed strong growth, but other sectors did not perform as well,
leading to an overall moderate growth rate. This sectoral variability
contributed to the overall revenue growth being less pronounced​.
Debt to equity ratio is 0.09 which shows ability of a company’s
shareholder equity to pay its debt obligations in a tough time. D/E of
less than 1 is preferred in case of TCS limited it is very low which is very
good.

Return on capital employed is 64.3% means the company is able to

generate favorable amount of returns on the investment done in
business activities.

58% is the dividend payout ratio of TCS. It is the percentage of a

company's earnings that are paid out to shareholders as dividends. It is
very good as investors are receiving dividends every year good for
people looking for dividend as one source of income.
PEER COMPARISON

Tata Consultancy Servicres tops the chart is doing very well as compared
to its peers in the same sector.

It has a comparatively very high return on capital investments and high

quarter on quarter profit variation as compared to most its peers.

The company’s working in the same sector has a very high price to
earnings ratio as compared to Coal India Limited.
 CONCLUSION
Tata Consultancy Services (TCS) reported a record $13.2 billion in deal
wins, which was an all-time high for the company & the company is
continuously researching into development of new technologies to keep
up with the fast changing world.

It has a very stable financial performance over the years with a

continuous growth also giving value to its investors by sharing dividends
regularly.

Other news include A 15-year deal with UK insurance company Aviva, TCS
got core banking transformation deal from Kuwait’s Burgan Bank, TCS
launched an industry-first GenAI aggregation platform called TCS AI
WisdomNext