Mehabe score: 5 G Factor: 2 Piotski Score: 7 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 2 and Piotski score of 7.
Description
Tata Consultancy Services is the flagship company and a part of Tata group. It 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. Site:TCS Main Symbol:TCS
Stock trades at 3860.0, above its 50dma 3668.09. It also trades above its 200dma 3431.08. The stock remains bullish on techicals
The 52 week high is at 3990.00 and the 52week low is at 2701.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 37.41%
– has been maintaining a healthy dividend payout of 54.58%
Weakness
– Stock is trading at 14.73 times its book value
-The company has delivered a poor sales growth of 8.61% over past five years.
Competition
– The industry trades at a mean P/E of 41.3x. L & T Infotech trades at the industry’s max P/E of 61.78x. TCS trades at a P/E of 39.0x
– Industry’s mean G-Factor is 2.4 while the mean Piotski score is 8.0. TCS has a G-Factor of 2 and Piotski scoreof 7.
– Average 1 month return for industry is 7.2%. The max 1- month return was given by HCL Technologies: a return of 16.66 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 48885.0 cr compared to Rs 42015.0 cr for period ended Dec 2020, a rise of 16.4% .
vis-vis 12208.0 for period ended Dec 2020 .
Operating Margins contracted -157.8 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 13433.0 cr for period ended Dec 2021 and operating profit margin at 27.5 % for same period.
The EPS for quarter ended Dec 2021 is Rs 26.41 compared to Rs 26.02 for previous quarter ended Sep 2021 and Rs 23.19 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 184868.0 cr for period ended TTM vis-vis sales of Rs 164177.0 cr for the period ended Mar 2021, a healthy growth of 11.2%. The 3 year sales cagr stood at 8.1%.
Net Profit reported at Rs 37647.0 cr for period ended TTM vis-vis sales of Rs 32430.0 cr for the period ended Mar 2021, rising 13.9%.
Company recorded a Net Profit CAGR of 6.2% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 38802.0 cr for period ended Mar 2021 vis-vis Rs 32369.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 39.0% compared to 37.0% over the last 3 Years. – The stock has given a return of 22% on a 1 Year basis vis-vis a return of 28% over the last 3 Years. – The compounded sales growth on a TTM bassis is 12% vis-vis a compounded sales growth of 10% over the last 3 Years. – The compounded profit growth on a TTM basis is 16% vis-vis a compounded profit growth of 9% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 15.37% vis-vis 15.43% for Jun 2021 – Public shareholding has remained largely constant. The Sep 2021 public holding stood at 4.51% vis-vis 4.38% for Jun 2021
Conclusion
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 37.41%
– has been maintaining a healthy dividend payout of 54.58% – Stock is trading at 14.73 times its book value
-The company has delivered a poor sales growth of 8.61% over past five years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 3668.09 and is trading at 3860.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
