FUNDAMENTAL ANALYSIS OF TCS

PRESENTED BY:
Kaustav banerjee,mfc part 1
Roll-
ECONOMY TODAY
 GDP AROUND 7.2
%,EXPECETD TO TOUCH
DOUBLE DIGIT BY 2014
 BUDGET INDICATES
INFALATIONARY TREND
BUT EXPECTED TO
LOWER DOWN BY MID OF
JUNE NEXT YEAR
 ECONOMY GROWTH
RATE AROUND 9.8%
 CONT:

 RECOVERY FROM SUB PRIME

CRISIS AND ECONOMIC BOOST
 EXCISE DUTY HIKED FROM 8 %
TO 10 %
 BANKING SECTOR REVIVING
AND SO IS TELECOM SECTORS

 STABLE POLITICAL AND SOCIAL

ENVIRONMENT,
 AGRICULTURAL AS WELL AS
INDUSTRIES ARE SHOWING
SIGNS OF GROWTH
 INDUSTRY:
1 I.T SECTOR IS ONE OF THE MAJOR CONTRIBUTORS TOWARDS INDIA’S GDP

2.MAJOR PLAYERS ARE TCS ,INFOSYS,WIPRO.HCL WHO SOLELY CONTRIBUTE

80% OF TOTAL C ONTRIBUTION

3.TCS RANKED AS THE LEADING I.T COMPANY IN INDIA WITH MAJOR GROWTH
PERSPECTIVE

4.A BOOM IN ANY OTHER SECTOR WILL RESULT IN A RESPECTIVE BOOM IN I.T SECTOR
BECAUSE NO SERVICES CAN BE IMAGINED TODAY WITHOUT TECHNOLOGY AND
SOFTWARE

5.REVIVAL OF COUNTRIES LIKE U.K,USA WILL ALSO RESULT FAVOURABLY FOR I.T
GENERATING MORE REVENUE
I.T IN INDIA:
HISTORICAL GROWTH OF I.T IN
INDIA
REVENUES FROM ENGEENEERING
AND INDUSTRIAL SERVICES
COMPANY ANALYSIS:
DRIVING THE I.T INDUSTRY ON FRONT FOOT
1 It was the first company to convince customers that
doing projects from India, thousands of miles away from
their home bases in the United States and United
Kingdom made for a compelling value proposition.
2 proactively set up operations across the globe.
Specifically, it entered into markets like Europe, Asia
Pacific, Latin America as well as Middle East and Africa.
TCS employees with experience greater
than 3 years in last three years
 
 PROJECTED P/L A/C FOR 31ST MARCH 2010
PARTICULARS 2006 2007 2008 2009 2010(EXP)

TOTAL 11293.76 15156.52 18979.67 21947.76 27873.65

INCOME
EXPENDITUR 8219.41 10985.84 13975.81 16808.07 21500
E
P.B.T 3074.35 4170.68 5003.86 5139.69 6373.65

TAX 637.36

P.A.T 2716.87 3757.29 4508.76 4696.21 5736.29

BAL B/F FROM 1005.47 2833.30 4919.99 7347.89 9990.41

PREVIOUS
YEAR

PROFIT FOR 3858.50 6590.59 9428.75 12071.10 15726.7

APPROPIATIO
NS

E.P.S 27.76 38.39 46.07 47.91 58.61

Total income raised by 27 %

 Average growth of past 5 years = 24.5%

 Economic revival and favourable economic conditions
among countries like u.k.
 Tcs had undertaken some new projects with GOVT. OF
MAHARASTRA
 Consistent growth rate even in reciossionary period hence
favourable economic condition will ensure comparatively
more growth
 However company may not register very high growth in
revenue in 2009-2010 ,because fin year has almost come to
its end but a high growth rate may be confessed in the year
2010-2011
 TOTAL EXPENDITURE HAS BEEN
ASSIGNED A GROWTH RATE OF 28%

1)FROM THE PAST RECORDS IT IS SEEN THAT THE COMPANY’S

EXPENDITURES IS GROWING AT AN AVERAGE RATE OF 26.6%
2)THE INFLATION WAS COMPARATIVELY HIGH IN THE YEAR 2009
INDICATING HIGH LABOUR COSTS AND HIGH OPERATIONAL
EXPENDITURES
3)NEW PROJECTS UNDERTAKEN WILL BE
FAVOURABLE TOWARDSRISE IN EXPENDITURES
 PROVISON FOR TAXATION
1)TCS MAINTAINS AROUND 9% RATE ON INCOME AS
PROVISON
FOR TAXATION AND IT IS PROJECTED THAT THE RATE OF
PROVISON FOR TAXATION ON TAXABLE INCOME WOULD
BE AROUND 10% ,THE CHANGES AND REVISONS MADE IN THE
TAXATION POLICY BY F.M PRANAB MUKHARJEE WILL NOT BE
REFLECTED IN THE ANNUAL REPORT OF 2010-11 AS
BECAUSE TAX IS CALCULATED ON BASIS OF PREVIOUS YEAR.
HOWEVER INCREASEIN MAT FROM 15% TO 18% AND EXCISE
DUTY FROM 2% TO 10% WILLBE REFLECTED IN THE ANNUAL
REPORT FOR THE YEAR 2010-11
 Intrinsic value
 
 
Intrinsic value =projected eps x
projected p/e
Projected p/e =15
Projected eps =58.61
Intrinsic value = 58.61x15 =
879.15
Current market price = Rs.840
INTRINSIC VALUE > CURRENT MKT VALUE
 CONCLUSION
 
If we compare the intrinsic value of tcs
and mkt value it is clear that the
intrinsic value is more than the market
value , the market is favourable and the
share price is likely to go more up in
future ,hence I suggest the holders of
shares of TCS to hold the shares for now.