Explore the fundamental insights of Tata Consultancy Services (TCS) through a comprehensive balance sheet analysis. Discover key financial indicators and trends.
In the world of information technology and consulting, Tata Consultancy Services (TCS) stands out as a major player. Let’s dive into a fundamental analysis of TCS based on the provided dashboard, which covers financial performance, asset distribution, and profitability metrics.
Checkout the dashboard for visual and lets do Balance Sheet Analysis of TCS
Table of Contents
Sales, Net Profit & Operating Profit
Over the years, TCS has shown consistent growth in sales, operating profit, and net profit. Here’s a quick look:
- Sales: From March 2018 sales have risen from ₹1,23,104 crores to ₹2,40,893 crores in March 2024 and our projection for March 2025 is 2,68,113.60 crore, clearly it’s a uptrend.
- Net Profit: Starting at ₹25,880 crores in March 2018, it has grown steadily to ₹46,099 crores in March 2024, and our forecast is ₹50,623.04 crores by March 2025.
- Operating Profit: This metric has also shown an upward trend, reaching ₹71,041.19 crores by March 2025 as per our prediction.
Operating Profit Margin %
The Operating Profit Margin (OPM) percentage shows the efficiency of the company in managing its operating expenses relative to its revenue:
- OPM has fluctuated slightly, starting at 26.41% in March 2018, peaking at 28.35% in March 2021, and our projection is to be 26.46% by March 2025.
Earnings Per Share (EPS)
EPS indicates the company’s profitability on a per-share basis. TCS has shown a robust increase in EPS:
- From ₹67.46 in March 2018 to a projected ₹140.24 in March 2025, indicating strong shareholder value growth.
Return on Equity (ROE)
ROE measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested:
- ROE has improved from 30.40% in March 2018 to a projected 52.37% in March 2025 where other companies struggle to maintain 15-20%, showing increased efficiency in generating profit from equity.
Balance Sheet Analysis: Asset and Liability Distribution as on FY 2023-24
Understanding the distribution of assets and liabilities helps in assessing the company’s financial health:
- Asset Distribution: Investments form a significant portion of the assets, followed by CWIP (Capital Work in Progress), fixed assets, and other assets.
- Liability Distribution: The liabilities are diversified into borrowings, equity capital, reserves, and other liabilities, with reserves holding a substantial portion.
Now checkout the stock price of TCS during the period 2018 to till Date:
Frequently Asked Questions
What is TCS and what do they do?
Why is TCS’s sales growth important?
What does Operating Profit Margin (OPM) tell us?
Why is Earnings Per Share (EPS) important for investors?
What does Return on Equity (ROE) indicate?
How does the asset distribution affect TCS’s financial health?
Why is liability distribution important?
What does the projected financial performance tell us about TCS’s future?
How can this analysis be useful for potential investors?
How can this analysis be useful for potential investors?
Where can I find more detailed financial information about TCS?
Conclusion
The Balance Sheet Analysis of TCS reveals a company that is on a strong growth trajectory with increasing sales, profit, and shareholder returns. The steady improvement in EPS and ROE highlights the company’s effective management and profitability. Meanwhile, a balanced distribution of assets and liabilities ensures financial stability. As TCS continues to expand its footprint in the global IT services market, these indicators suggest a promising outlook for investors and stakeholders alike.
Check out In-depth Balance Sheet Analysis of Reliance Industries Ltd Here
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