TCS 2021-22 Annual Report Analysis

Mon, 16 May

TCS has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

TCS Income Statement Analysis

• Operating income during the year rose 16.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 17.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 27.7% in FY22 as against 27.6% in FY21.
• Depreciation charges increased by 13.3% and finance costs increased by 23.1% YoY, respectively.
• Other income grew by 28.5% YoY.
• Net profit for the year grew by 18.1% YoY.
• Net profit margins during the year grew from 19.8% in FY21 to 20.1% in FY22.

TCS Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	1,641,770	1,917,540	16.8%
Other income	Rs m	31,340	40,270	28.5%
Total Revenues	Rs m	1,673,110	1,957,810	17.0%
Gross profit	Rs m	453,280	530,480	17.0%
Depreciation	Rs m	40,650	46,040	13.3%
Interest	Rs m	6,370	7,840	23.1%
Profit before tax	Rs m	437,600	516,870	18.1%
Tax	Rs m	111,980	132,380	18.2%
Profit after tax	Rs m	325,620	384,490	18.1%
Gross profit margin	%	27.6	27.7
Effective tax rate	%	25.6	25.6
Net profit margin	%	19.8	20.1

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TCS Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 424 billion as compared to Rs 342 billion in FY21, thereby witnessing an increase of 24.0%.
• Current assets rose 9% and stood at Rs 1,083 billion, while fixed assets rose 7% and stood at Rs 295 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 1,378 billion as against Rs 1,268 billion during FY21, thereby witnessing a growth of 9%.

TCS Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	864,330	891,390	3.1
Current Liabilities	Rs m	341,550	423,510	24.0
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	1,268,280	1,378,060	8.7
Current assets	Rs m	992,800	1,083,100	9.1
Fixed Assets	Rs m	275,480	294,960	7.1
Total Assets	Rs m	1,268,280	1,378,060	8.7

TCS Cash Flow Statement Analysis

• TCS's cash flow from operating activities (CFO) during FY22 stood at Rs 399 billion, an improvement of 3.0% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -9 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -336 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 56 billion from the Rs -18 billion net cash flows seen during FY21.

TCS Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	388,020	399,490	3.0%
Cash Flow from Investing Activities	Rs m	-81,290	-8,970	-
Cash Flow from Financing Activities	Rs m	-326,340	-335,810	-
Net Cash Flow	Rs m	-17,880	56,300	-

Current Valuations for TCS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 105.1, an improvement from the EPS of Rs 88.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 3,385.0, stands at 32.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 13.9 times, while the price to sales ratio stands at 6.5 times.
• The company's price to cash flow (P/CF) ratio stood at 30.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	443.8	524.1
TTM Earnings per share	Rs	88.0	105.1
Diluted earnings per share	Rs	89.0	105.1
Price to Cash Flow	x	31.7	30.0
TTM P/E ratio	x	35.7	32.2
Price / Book Value ratio	x	10.7	14.5
Market Cap	Rs m	9,238,843	12,898,705
Dividends per share (Unadj.)	Rs	38.0	43.0

Ratio Analysis for TCS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.6x during FY22, from 2.9x during FY21. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 66.9x during FY22, from 69.7x during FY21. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 43.1% during FY22, from 37.7% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 58.9% during FY22, from 51.4% during FY21. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 28.5% during FY22, from 26.2% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	2.9	2.6
Debtors’ Days	Days	7	6
Interest coverage	x	69.7	66.9
Debt to equity ratio	x	0.0	0.0
Return on assets	%	26.2	28.5
Return on equity	%	37.7	43.1
Return on capital employed	%	51.4	58.9

To see how TCS has performed over the last 5 years, please visit here.

TCS Share Price Performance

Over the last one year, TCS share price has moved up from Rs 3,050.8 to Rs 3,385.0, registering a gain of Rs 334.3 or around 11.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 29,792.8 (down 0.6%). Over the last one year it has moved up from 26,131.6 to 29,792.8, a gain of 3,661 points (up 14.0%).

Overall, the S&P BSE SENSEX is up 8.8% over the year.

(To know more, check out historical annual results for TCS and quarterly results for TCS)

Read: Latest Annual Report Analysis of TCS