Result Analysis-TCS-23-07-2020

Result-Analysis-Image

TCS  (In Cr.) 1QFY21 4QFY20 1QFY20 QoQ % YoY%
Revenue 38322 39946 38172 -4.1% 0.4%
EBITDA 10024 10976 10037 -8.7% -0.1%
EBITDA Margin (%) 26.2% 27.5% 26.3% (130) bps (10) bps
Net Profit 7049 8093 8153 -12.9% -13.5%
Net Profit Margin (%) 18.4% 20.3% 21.4% (190) bps (300) bps
Consolidated Segment Information 1Q FY 21 4QFY20 1QFY20 QoQ % YoY%
Banking, Financial Services and Insurance 15282 15207 14978 0.5% 2.0%
Manufacturing 3884 4217 4041 -7.9% -3.9%
Retail and Consumer Business 5912 6682 6422 -11.5% -7.9%
Communication, Media and Technology 6495 6751 6236 -3.8% 4.2%
Others 6749 7089 6495 -4.8% 3.9%
Revenue from Operation 38322 39946 38172 -4.1% 0.4%

 

Result Highlight:

  • USD term revenue de-grew by 7% sequentially and 7.8% YoY to $ 5,05.9 Cr. slightly lower than street estimates.
  • CC terms revenue de-grew 6.3% YoY again marginally lower than street estimates.
  • Life Sciences (+13.8% YoY) Shines Amid Widespread Declines.
  • EBIT margin came at 23.6% against 24.2% in the corresponding period of previous year and lower than expectation of 24.5%.
  • TCS announced order wins of US$6.9 bn, representing yoy growth of 21%. Driving this growth was a bunch of large deals initiated in earlier quarters and closed in 1QFY21 and plenty of smallsize deals.
  • Net manpower addition came down by 4,788 QoQ to 4,43,676 people which indicate strong cash conservation approach.
  • Geography wise, except Europe, all other regions de-grew.
  • Attrition remained healthy at 11.1% and came down sequentially.
  • Except Healthcare, all other verticals de-grew sequentially and YoY basis.
  • The Directors have declared an Interim Dividend of Rs 5 per Equity Share of Rs 1 each of the Company.
  • The Interim Dividend shall be paid on Friday, July 31, 2020 to the equity shareholders of the Company.

Management commentary Highlight:

  • Management believes the business has bottomed out and recovery will be visible going forward.
  • Around 20% of the business impact in Q1FY21 was due to supply side impact and that is expected to get solved going forward.
  • Latin America was flat. Apart from these all geographies de grew. Working capital Cycle of the company came at 71 days vs 68 days last quarter, indiacting working capital is well managed.
  • New deal wins came at $6.9 billion, 20% higher than the corresponding period of previous year and indicating strong momentum in deal signs even in lockdown.
  • Deal pipeline is strong and management believes in Q4FY21 revenue will recover and will see a flat CC term performance.
  • Focus on digital infrastructure creation by clients is driving the growth in deal wins.
  • Reaction of global companies and Governments were prompt during the pandemic and that is expected to drive the business growth going forward.

View:

Results came marginally lower than expectations both in growth and margin side. A financial service was the bright spot with sequential revenue decline of 2.1%, while life sciences and healthcare bucked the trend and reported growth. The sharp decline in revenue had a proportionally large negative impact on the operating margin in cost management approach.

DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014

Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more


For Daily Share Market Updates, Daily debt market review, Market Research Analysis reports, Weekly Techno-Funda Report, Fundamental Analysis Report, Monthly Recommended stock Picks, Equity Trading Tips, Upcoming IPO/NFO/Bonds/Ncd’s updates & other related information Subscribe our research plan