TCS Share Q1 Results

TCS Share Q1 Results
by Nikita Bhoota 09/07/2021
  • TCS reported 18.5% growth in total sales revenues for the Jun-21 quarter on consolidated basis at Rs45,411cr. 
  • On a sequential basis, the revenues were higher 3.9% compared to Rs43,705cr in the Mar-21 quarter. 
  • TCS witnessed growth in all its principal verticals including BFSI, manufacturing, retail, CMT and life sciences.
  • EBIT margins at 25.5% contracting 130bps QoQ due to the annual wage hikes and visa costs. Management indicated margins are largely sustainable YoY. Hiring was at an all-time high of 20.4k on the back of 19.4k hires in 4Q, as TCS crossed the 500k headcount mark. Attrition rose by 140bps to 8.6% LTM
  • Management is confident of delivering double-digit revenue growth and sustaining margins in FY22, supported by ramp up of deals and broad-based improvement in IT spending. 
  • Deal wins were strong at US$8.1bn (+16% YoY TTM), with a healthy mix of small and large deals.

 

Revenues by verticals - FY21

Verticals

Contribution

BFSI

31.70%

Regional Markets & Others

19.20%

Retail

14.40%

Lifescience

9.70%

Mfg.

9.60%

Tech

8.70%

Telecom

6.70%

 

Revenues by geographies - FY21

Geographies

Contribution

America

51.40%

UK/Europe

31.90%

APAC

9.60%

India

5.20%

MEA

2.00%

 

Also Check : Result Expectation of Top IT Companies

 

About the Company:
With 500,000+ employees and FY21 revenues of US$22.2bn, TCS is India’s largest IT services vendor. Though application services remain the primary services offering, the company has attained credible size in other service offerings such as infrastructure services, BPO and testing services. BFSI continues to be TCS’ most important vertical (30% of revenues). Telecom, manufacturing and retail are the other large verticals. The US continues to be the most important geography; however, the company is increasing its presence in Europe/UK. 

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

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Did the LIC IPO just get the Government Stamp of Approval

LIC
12/07/2021

Has the LIC IPO just been given the final stamp of approval? If you go by news reports, it does look like the LIC IPO may have just got its stamp of approval from the Cabinet Committee on Economic Affairs (CCEA). Now CCEA approval is the voice of the government and it just means that it is now over to the actual IPO process. LIC IPO promises to be the biggest IPO ever raising close to $8-10 billion. 

Read: LIC IPO coming soon?

As of now, only the advisors for the issue have been appointed and the actuaries are working towards an embedded valuation for LIC. Much of the regulatory changes to the LIC Act were already approved as part of the Finance Bill. That means, the next big step would be the appointment of investment bankers to start the IPO process in right earnest.

It is estimated that if all goes according to plan, the issue will happen around Feb or Mar 2022, because the government is apparently quite keen to list LIC before the end of the current fiscal year in Mar-22. The LIC IPO remains crucial to the government plans for resource raising as it has targeted an aggressive Rs.175,000 crore to be raised via disinvestments in FY22. If the government has to get anywhere close to that figure, it has to make a huge success of the LIC IPO. That process may have just about kicked off with the CCEA approval.

Also Check: List of upcoming IPOs in 2021

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Zomato IPO – Can you afford not to invest in this IPO?

Zomato IPO
IPO
12/07/2021

If you have ordered food online at any point of time in India, it is very unlikely that you have not heard of Zomato, or used it. Like most of ecommerce and digital players, Zomato has a long gestation so it is still making losses. But that is hardly the game when you invest in the Zomato IPO. Zomato is approaching the IPO market in India to raise Rs.9,375 crore from the retail and institutional investors. Out of this amount, Rs.9,000 crore will be the fresh issue portion and Rs.375 crore will be an exit route for Info Edge. 

Key terms of the IPO issue of Zomato

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

14-Jul-2021

Face value of share

Rs.1 per share

Issue Closes on

16-Jul-2021

IPO Price Band

Rs.72 - Rs.76

Basis of Allotment date

22-Jul-2021

Market Lot

195 shares

Refund Initiation date

23-Jul-2021

Retail Investment limit

13 Lots (2,535 shares)

Credit to Demat

26-Jul-2021

Retail limit - Value

Rs.192,660

IPO Listing date

27-Jul-2021

Fresh Issue Size

Rs.9,000 crore

Pre issue promoter stake

N.A.

Offer for Sale Size

Rs.375 crore

Post issue promoters

N.A.

Total IPO Size

Rs.9,375 crore

Indicative valuation

Rs.59,625 crore

Listing on

BSE

HNI Quota

15%

QIB Quota

75%

Retail Quota

10%

Data Source: IPO Filings

The fresh funds worth Rs.9,000 crore will be allocated for the following purposes.

  • Funding organic growth by expanding its scale and spread of operations to reach out to more digital customers across India.
  • Funding inorganic growth via acquisitions and takeovers of smaller and niche players to catalyse growth in its core segment.

Also Check: Things to know about Zomato IPO

A quick look at the Zomato Financials

Here is a quick look at the financials of Zomato, and we have only captured key financial parameters of relevance to the Zomato IPO for the last 3 fiscal years.

Financial Parameter

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Net Worth

Rs.8,096 cr

Rs.2083 cr

Rs.2,597 cr

Revenues

Rs.1,994 cr

Rs.2,605 cr

Rs.1,313 cr

EBITDA

Rs.(467) cr

Rs.(2,305) cr

Rs.(2,244) cr

Net Loss

Rs.(817) cr

Rs.(2,386) cr

Rs.(1,011) cr

 

Investment Perspective for Zomato IPO

That is the bottom line. Should you invest in the Zomato IPO or should you give it a pass. At the outset, this is not a company that you can measure on traditional parameters. This is a business that requires a lot of front-ending of costs and back-ending of revenue related benefits. Here are some parameters that would help you take a decision.

  1. The food delivery business is largely based on the network effect. More options, means more customers and more customers means more gross order value (GOV). When there are more customers, more restaurants sign on and that is how the network effect forms a virtuous cycle. Zomato has surely perfected this virtuous cycle.
  2. While this is an industry that is very dynamic, the network outreach, brand of Zomato and the size of the Indian digital market mean that there are no immediate top line threats for the company and that is the good news.
  3. The unit economics of Zomato has been constantly improving as its promotion expenses have come down from 88% of total income in 2019 to 25% of total income in 2021. As a result, the contribution profit as a share of GOV has been positive in each of the four quarters of FY21.

These are the points you must keep in mind when you take a final call on investing in the Zomato IPO.

 

Watch a detailed video on Zomato IPO:

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Godrej Properties is India’s largest realty player

Godrej Properties
12/07/2021

You may believe that the real estate market is dull but Godrej Properties begs to differ. Consider these numbers. Over the next couple of years, Godrej Properties plans to invest close to $1 billion or Rs.7,500 crore to acquire and develop new projects. Secondly, Godrej has confirmed that in the last fiscal year, it sold 9,345 homes which is an average of 25 homes sold per day. To bankroll its grand plans, Godrej Properties has also raised a whopping Rs.3,750 crore through placement to Qualified Institutional Buyers (QIBs).

What has all this done to the top line numbers of Godrej Properties. For fiscal year 2020-21, Godrej Properties emerged as the largest real estate developer in the Indian markets. Godrej Properties sales bookings for the year were 14% higher at Rs.6,725 crore. This virtually puts the largest real player in the real estate space, Macrotech Developers (formerly Lodha Developers), to the second place. During the fiscal 2020-21, Macrotech reported total sales of Rs.6,000 crore, more than 10% lower than Godrej Properties.

It is said that the proof of the pudding lies in its eating and the proof of a stock’s attractiveness lies in its stock price. Since Sep-20, the stock of Godrej Properties has almost doubled from Rs.819 to Rs.1,517. This is largely on the back of the emergence of Godrej in the top league among real estate developers. More than anything, the markets appear to be excited about the billion dollar investment that the company is infusing into expanding its business to the next trajectory. 
 

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Crude Oil at $75/bbl – Here comes inflation

Crude Oil
12/07/2021

Brent Crude touched $75/bbl after a long gap. The last time Brent Crude was above $75 was back in 2018, when oil peaked around $79/bbl. Of course, crude oil is still a long way off the $100/bbl mark which it scaled prior to 2014. What exactly is driving oil higher? For one, the OPEC talks for increasing oil supply has failed. OPEC is a cartel of oil players led by Saudi Arabia, which controls over 30% of the global oil supply. OPEC had cut oil supply last year to boost oil prices and that has been one of the reasons for the rise in oil prices.

But low supply has a cost to the oil producers too. They are not able to profit fully from the higher prices due to supply constraints. As a result, a clutch of OPEC members including United Arab Emirates have been insisting on a sharp increase in supply. In fact, OPEC was planning to add nearly 7 million barrels per day (bpd) from Aug-21 but that is the crux of the dispute. While UAE and other countries are keen to add supply, big guns like Saudi Arabia want to persist with supply cuts for longer.

This dispute has meant that OPEC supply may not fully return in August. That is not great news for India because every $10 increase in crude oil prices leads to 0.5% increase in inflation. With India relying on imports for 80-85% of its oil needs, this vulnerability is here to stay. That explains petrol and diesel at above Rs.100/litre. As long as the OPEC dispute is on, India must prepare for higher levels of inflation.

Read: Sectors dependent on crude Oil

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SFBs get a boost as they can absorb the holding company

small finance bank
12/07/2021

In the last few days, small finance banks and their parent companies have shown a sharp rally. What exactly has changed? Both Equitas Small Finance Bank (SFB) and Ujjivan Small Finance Bank (SFB) propose to apply for amalgamation of their parent with the SFB. While Ujjivan Financial is the holding company of Ujjivan SFB; Equitas Holdings is the holding company for Equitas SFB. This was after the RBI permitted SFBs to merge their holding companies into themselves. How this announcement relevant.

It assumes significance as both Equitas SFB and Ujjivan SFB are about to complete five years of operations. Under the RBI regulations, on completion of 5 years the holding company must dilute its stake in the SFB to below 40%. Both the holding companies; Ujjivan and Equitas, hold nearly 82% in the SFB arms. Reducing this stake to below 40% would entail a massive surge in free float depressing prices. The new RBI rule will allow the SFB holding companies to avoid dilution by merging the holding company into the SFB. This will ensure that the valuation of the group improves.

In the last few months, this mandatory holding company dilution was the reason for stock prices being tepid. With RBI allowing SFB holding companies to amalgamate with the SFB, this dilution issue is automatically addressed. But there is a bigger takeaway. Most holding companies in India are subjected to a holding company discount and this was depressing valuations. With the new rule, that discount should go away, allowing more value based pricing for SFBs. That is what is getting markets excited about Ujjivan and Equitas.