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                                                                                                                           RESULTS REVIEW 4QFY13                 18 APR 2013

                                                                                                      Tata Consultancy Services
                                                                                                                                                   UNDERPERFORM
INDUSTRY             IT SERVICES             Muted upside, Retain UPF
CMP (as on 17 Apr 2013) Rs 1,456             TCS delivered yet another stable quarter, with                             came at 28.1%, down 90bps QoQ, in-line with our
Target Price             Rs 1,452            topline and EBIDTA in-line with our estimates. Higher                      expectation. One-off expenses owing to US lawsuit
Nifty                                5,689   other income coupled with lower tax rates helped                           settlement impacted margins for the quarter. PAT at
                                             deliver PAT above our estimates. Management                                Rs 36.15bn was ahead of estimates (Rs 35bn) driven by
Sensex                              18,731
                                             retained its optimistic tone on the business                               higher other income.
KEY STOCK DATA                               environment and indicated at beating Nasscom’s
                                             growth rate for FY14E. TCS guided that incremental                        India business drives growth: Manufacturing (up 3.1%
Bloomberg/Reuters           TCS IN/TCS.BO
                                             growth would be driven by IMS, regulatory spend                            QoQ), BFSI (up 4.3% QoQ) drove growth on vertical
No. of Shares (mn)                   1,957                                                                              front. IMS (up 6.6% QoQ), Enterprise solutions (up 5.9%
                                             and new technology initiatives (digital marketing,
MCap (Rs bn) / ($ mn)       2,852 / 52,730   analytics, mobility). In contrast to Infosys, TCS has                      QoQ) delivered higher traction amongst service lines.
                                             given wage hikes to its employees effective 1QFY14                         India (up 19% QoQ), Continental Europe (up 6.5% QoQ)
6m avg traded value (Rs mn)          1,837
                                             (offshore : 7%, onsite: 2-4%).                                             drove traction on the geographic front.TCS indicated at
STOCK PERFORMANCE (%)                                                                                                   winning 11 new deals during the quarter. Company
                                              We see risk to TCS’ margin profile in FY14E and                           suggested stable pricing environment.
52 Week high / low      Rs 1,598 / 1,040
                                             believe its relatively rich valuations (16.5x on FY15E)
                     3M       6M     12M     leaves limited scope for upsides. We retain EPS                           Hiring remains intact : Exit headcount came at 276,196
Absolute (%)          6.9    13.5     34.4   estimates but downgrade valuation multiple a tad                           employees with net adds of 12,559 for the quarter.
                                             lower to 16.5x FY15E EPS (earlier 17x). We revise our                      Utilization (excluding trainees) came at 82%, up 30bps
Relative (%)         13.1    12.9     26.5
                                             TP downwards by 2.5% to Rs 1,452/sh. Maintain UPF.                         on a sequential basis. TCS guided for gross hiring target
SHAREHOLDING PATTERN (%)                                                                                                of 45,000 employees for FY14 (of which the company
Promoters                            73.96      4QFY13 highlights : Total revenues at US$ 3,040mn,                     has already given 25,000 campus offers for FY14E).
                                                 up 3.1% QoQ in-line with our estimates. Volume                         Management indicated that it would focus on
FIs & Local MFs                       5.44
                                                 growth remained strong at 4.4% QoQ. EBIDTA margin                      improving utilization rates (ex-trainees) to 85%.
FIIs                                 16.14
Public & Others                       4.46   FINANCIAL SUMMARY (CONSOLIDATED)
                                             (Rs mn)                      4QFY13        3QFY13    QoQ (%)     4QFY12       YoY (%)       FY12        FY13      FY14E       FY15E
Source : BSE
                                             Net Sales                   1,64,300      1,60,690        2.2   1,32,593         23.9   4,88,936    6,29,884   7,19,676    8,09,425
                                             EBITDA                        46,174        46,596      (0.9)     39,246         17.7   1,44,357    1,80,391   2,06,282    2,32,803
                                             PAT                           36,158        35,487        1.9     28,951         24.9   1,04,142    1,39,169   1,52,310    1,72,507
                                             Diluted EPS (Rs)               18.47         18.13        1.9      14.79         24.9       53.2        71.1       77.8        88.1
                                             P/E (x)                                                                                     27.4        20.5       18.7        16.5
Madhu Babu                                   EV / EBITDA (x)                                                                             19.2        15.4       13.3        11.6
madhu.babu@hdfcsec.com                       RoE (%)                                                                                     38.5        40.8       36.0        34.5
+91-22-6171-7316                             Source: Company, HDFC sec Inst Research
                                                                        HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters
                                                                                                                                                                   TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13


                              QUARTERLY FINANCIALS SNAPSHOT
                              (Rs mn)                                                                                           4QFY13                                   3QFY13                                          QoQ                                 4QFY12                YoY
Revenues edged up 3.1%        USD revenues                                                                                         3,040                                    2,948                                         3.1                                   2,648              14.8
sequentially to US$ 3,040mn   Net Sales                                                                                        164,300                                  160,690                                           2.2                                132,593               23.9
                              Employee cost                                                                                      62,448                                   61,419                                                                              49,884
                              Other Operating expenses                                                                           55,678                                   52,676                                                                              43,464
                              Operating Expenses                                                                               118,126                                  114,094                                                                               93,348
                              Operating Profits                                                                                  46,174                                   46,596                                         (0.9)                                39,246               17.7
                              Interest Cost                                                                                        (189)                                      (79)                                                                                (30)
                              Depreciation                                                                                       (2,898)                                  (2,774)                                                                             (2,434)
                              Other Income                                                                                         4,424                                    2,212                                                                                 986
                              PBT                                                                                                47,511                                   45,954                                                                              37,768
                              Minority Interest                                                                                      420                                      410                                                                                 243
                              Tax                                                                                              (10,933)                                 (10,057)                                                                              (8,574)
                              APAT                                                                                               36,158                                   35,487                                            1.9                               28,951               24.9
                              Source: Company, HDFC sec Inst Research

                              MARGIN ANALYSIS
                              Margin Analysis                                                                                  4QFY13                                   3QFY13                              QoQ (bps)                                        4QFY12            YoY (bps)
                              Employee Costs / Sales                                                                            38.0%                                    38.2%                                   (21)                                         37.6%                   39
                              Other Operating Expenses / Sales                                                                  33.9%                                    32.8%                                   111                                          32.8%                  111
                              EBIDTA Margin                                                                                     28.1%                                    29.0%                                   (89)                                         29.6%                (149)
                              Net Profit Margin                                                                                 22.0%                                    22.1%                                    (8)                                         21.8%                   17
                              Tax Rate                                                                                          23.0%                                    21.9%                                   113                                          22.7%                   31
                              Source: Company, HDFC sec Inst Research
                              VOLUME GROWTH(QoQ)
                                              12.0%                                                                                                                         11.2
                                              10.0%                8.2
                                                         7.6                                                                                                       8.1                                  7.4
                                                8.0%
                                                                                                    6.2                                           6.5                                                            6.2
                                                6.0%                     5.3 4.8                                                                                                     5.7                                                    5.3 4.9
                                                                                                                                        5.0                                                                                                                           4.4
                                                                                                                               3.5                        4.0                                                            3.2 3.3
                                                4.0%                                                                                                                                          2.9
                                                                                                             2.4
                                                2.0%                                       1.3                                                                                                                                                               1.3
                                                0.0%
                                               -2.0%
                                                                                                                      -2.5
                                               -4.0%
                                                       Q1FY08
                                                                Q2FY08
                                                                         Q3FY08
                                                                                  Q4FY08
                                                                                           Q1FY09
                                                                                                    Q2FY09
                                                                                                             Q3FY09
                                                                                                                      Q4FY09
                                                                                                                               Q1FY10
                                                                                                                                        Q2FY10
                                                                                                                                                 Q3FY10
                                                                                                                                                          Q4FY10
                                                                                                                                                                   Q1FY11
                                                                                                                                                                            Q2FY11
                                                                                                                                                                                     Q3FY11
                                                                                                                                                                                              Q4FY11
                                                                                                                                                                                                       Q1FY12
                                                                                                                                                                                                                Q2FY12
                                                                                                                                                                                                                         Q3FY12
                                                                                                                                                                                                                                  Q4FY12
                                                                                                                                                                                                                                           Q1FY13
                                                                                                                                                                                                                                                    Q2FY13
                                                                                                                                                                                                                                                             Q3FY13
                                                                                                                                                                                                                                                                      Q4FY14
                              Source: Company, HDFC sec Inst Research
                                                                                                                                                                                                                                                                               Page | 2
                                                                                                                TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13



                                     GEOGRAPHIC MIX OF REVENUES
                                     Geography Mix (%)              Q3FY11      Q4FY11     Q1FY12     Q2FY12      Q3FY12    Q4FY12    Q1FY13    Q2FY13      Q3FY13    Q4FY13
                                     North America                    53.5        53.4       52.9       53.4        53.3      53.6      53.5      52.8        52.6      52.1
                                     Latin America                      3.1         3.2        3.1        3.0         3.1       3.1       3.3       3.4         3.6       3.5
UK reported sequential decline in    UK                               16.0        15.5       15.3       15.5        15.0      15.2      17.0      17.1        17.5      16.8
revenues. North America has also     Continental Europe                 9.3         9.9        9.9      10.1        10.5        9.8       9.6       9.5         9.1       9.4
reported muted growth on a           India                              9.2         8.8        9.3        8.3         8.4       8.5       7.1       7.5         7.6       8.8
sequential basis                     APAC                               6.9         7.2        7.3        7.5         7.6       7.7       7.4       7.6         7.5       7.3
                                     MEA                                2.0         2.0        2.2        2.2         2.1       2.1       2.1       2.1         2.1       2.1
                                     Total                           100.0       100.0      100.0      100.0       100.0     100.0     100.0     100.0       100.0     100.0
India business showed robust
                                     Source: Company, HDFC sec Inst Research
traction and has aided
incremental growth                   GEOGRAPHIC REVENUES
                                      (US$ mn)                                             4QFY13               3QFY12           QoQ(%)           4QFY12          YoY growth
                                     North America                                           1,584                1,551              2.1            1,419                11.6
                                     Latin America                                             106                  106              0.3               82                29.6
                                     UK                                                        511                  516            (1.0)              403                26.9
                                     Continental Europe                                        286                  268              6.5              260                10.1
                                     India                                                     268                  224            19.4               225                18.8
                                     APAC                                                      222                  221              0.4              204                 8.8
                                     MEA                                                        64                   62              3.1               56                14.8
                                     Total                                                   3,040                2,948              3.1            2,648                14.8
                                     Source: Company, HDFC sec Inst Research

                                     VERTICAL-WISE REVENUE MIX
                                     Vertical (%)                      Q3FY11     Q4FY11     Q1FY12    Q2FY12      Q3FY12   Q4FY12    Q1FY13    Q2FY13      Q3FY13    Q4FY13
                                     BFSI                               44.6%      44.0%      43.3%     43.5%       43.3%    42.2%     43.0%     42.8%       43.0%     43.5%
                                     Manufacturing                       7.2%       7.5%       7.6%      7.8%        7.8%     7.9%      7.9%      8.2%        8.5%      8.5%
Manufacturing and BFSI
                                     Telecom                            11.9%      11.0%      11.7%     10.7%       10.0%    10.0%     10.3%     10.3%        9.5%      9.3%
delivered traction on the vertical   Life Science and Health Care        5.2%       5.3%       5.2%      5.3%        5.3%     5.3%      5.3%      5.2%        5.2%      5.1%
front                                Retail and Distribution            10.9%      11.2%      11.6%     12.1%       12.3%    12.5%     13.2%     13.4%       13.4%     13.4%
                                     Transportation                      3.4%       3.9%       3.7%      3.8%        3.8%     3.7%      3.7%      3.6%        3.6%      3.4%
                                     Energy & Utilities                  4.4%       4.6%       3.8%      4.3%        4.1%     3.8%      3.6%      3.6%        3.8%      3.8%
                                     Media and Entertainment             2.3%       2.3%       2.2%      2.1%        2.2%     2.2%      2.2%      2.2%        2.1%      2.1%
                                     Hi-tech                             5.0%       5.4%       5.8%      5.9%        5.9%     6.0%      6.0%      5.9%        5.8%      5.7%
                                     Others                              5.1%       4.8%       5.1%      4.5%        5.3%     6.4%      4.8%      4.8%        5.1%      5.2%
                                     Source: Company, HDFC sec Inst Research




                                                                                                                                                                      Page | 3
                                                                                                            TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13


                                    VERTICAL-WISE REVENUES
                                    Vertical (US$ mn)                                       4QFY13            3QFY13              QoQ          4QFY12           YoY growth
                                    BFSI                                                      1,322             1,268               4.3          1,118                 18.3
                                    Manufacturing                                               258               251               3.1            209                 23.5
                                    Telecom                                                     283               280               0.9            265                   6.8
                                    Life science and Health Care                                155               153               1.1            140                 10.5
                                    Retail and Distribution                                     407               395               3.1            331                 23.1
                                    Hitech                                                      173               171               1.3            159                   9.1
                                    Transportation                                              103               106             (2.6)             98                   5.5
                                    Energy &Utilities                                           116               112               3.1            101                 14.8
                                    Media and Entertainment                                      64                62               3.1             58                   9.6
                                    Others                                                      158               150               5.1            169                 (6.7)
                                    Total                                                     3,040             2,948               3.1          2,648                 14.8
                                    Source: Company, HDFC sec Inst Research

                                    SERVICE MIX
                                    Service line(%)                Q3FY11     Q4FY11    Q1FY12    Q2FY12      Q3FY12    Q4FY12    Q1FY13    Q2FY13    Q3FY13       Q4FY13
IMS services continued to gain      ADM                             45.0%      46.1%     46.2%     44.7%       44.0%     44.4%     43.4%     43.1%     42.4%        42.4%
robust traction on service line     Engineering design               4.8%       4.8%      4.6%      4.8%        4.6%      4.6%      4.6%      4.6%      4.7%         4.6%
                                    Infrastructure services         10.5%       9.1%      9.5%      9.6%       10.6%     10.4%     10.6%     11.4%     11.7%        12.1%
perspective. Enterprise solutions
                                    Enterprise Solutions            14.9%      15.7%     15.7%     15.8%       15.8%     15.2%     15.2%     14.9%     15.1%        15.5%
registered strong traction on       Global Consulting                2.3%       2.1%      2.2%      2.6%        2.8%      2.7%      2.8%      3.0%      3.2%         3.1%
service line front                  Asset Leverage Solutions         4.0%       3.6%      3.6%      4.0%        3.8%      3.9%      2.8%      2.7%      2.8%         2.5%
                                    Assurance Services               7.1%       7.0%      7.3%      7.6%        7.6%      7.3%      7.6%      7.7%      7.7%         7.8%
                                    BPO                             11.4%      11.6%     10.9%     10.9%       10.8%     11.5%     13.0%     12.6%     12.4%        12.0%
                                    Source: Company, HDFC sec Inst Research
Hiring remained robust for the
                                    EMPLOYEE STRENGTH
quarter. Attrition continued to
                                                                   Q3FY11     Q4FY11    Q1FY12    Q2FY12     Q3FY12     Q4FY12    Q1FY13    Q2FY13    Q3FY13      Q4FY13
moderate indicating softer          Total Number of Employees      186,914    198,614   202,190   214,770    226,751    238,583   243,545   254,076   263,637     276,196
business environment                Gross Additions                 20,219     19,324    11,988    20,349     18,907     19,156    13,831    18,654    17,145      20,098
                                    Net Additions                   12,497     11,700     3,576    12,580     11,981     11,832     4,962    10531       9561      12,559
Utilization rates showed            Attrition                        14.4%      14.4%     14.8%     13.7%      12.8%      11.1%     12.0%     11.4%     11.2%        9.4%
marginal improvement on a           Utilization (Incl- trainees)     77.1%      75.1%     76.2%     76.4%      74.0%      71.3%     72.3%     72.8%     72.1%       72.2%
sequential basis                    Utilization (excl- trainees)     83.8%      82.4%     83.2%     83.1%      82.0%      80.6%     81.3%     81.6%     81.7%       82.0%
                                    Source: Company, HDFC sec Inst Research




                                                                                                                                                                   Page | 4
                                                                                                                                   TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13


                                                   CLIENT METRICS
                                                                                  Q2FY11     Q3FY11        Q4FY11      Q1FY12    Q2FY12    Q3FY12      Q4FY12         Q1FY13      Q2FY13           Q3FY13    Q4FY13
                                                   Top Client                       8.0%       7.7%          7.4%        7.1%      6.9%      6.9%        6.8%           6.7%        6.5%             6.3%      6.1%
                                                   Top 5 Clients                   22.1%      21.9%         21.4%       20.7%     20.0%     19.6%       19.2%          18.8%       18.4%            18.0%     17.8%
                                                   Top 10 Clients                  30.1%      30.1%         29.6%       28.9%     28.3%     27.7%       27.1%          26.5%       25.6%            25.2%     25.2%

                                                   USD 1mn                            420          434           458      473        495      512             522          527          538           551        556
                                                   USD 5mn                            192          200           208      219        230      235             245          259          269           273        277
                                                   USD10 mn                           131          139           143      148        155      161             170          175          182           185        196
                                                   USD20 mn                            66           76            81       91         94       95              99          105          108           114        115
                                                   USD50 mn                            25           25            27       33         36       39              43           46           45            47         48
                                                   USD100 mn                            8            9             8       10         12       14              14           14           14            16         16

                                                   Number Of Active Clients           936          959           969      959     1,010      1,003       1,037          1,032          1041          1051       1065
                                                   New Client Additions                30           35            39       24        35         40          42             29            41            31         52
                                                   Source: Company, HDFC sec Inst Research



PEER VALUATION
                                        Mcap                        EPS                                    P/E                             EV/EBIDTA                                      ROE (%)
                          CMP
                                       (Rs bn)      FY12     FY13E        FY14E   FY15E     FY12    FY13E        FY14E   FY15E    FY12     FY13E     FY14E      FY15E         FY12      FY13E       FY14E     FY15E
Infosys                   2,281            1,310    145.6    164.9        166.3   176.9     15.8         13.9     13.8    13.0     10.3      9.3        8.5          7.9         27           26       22        21
TCS                      1,456             2,855     53.2     70.5         78.0    88.0     27.3         20.6     18.7    16.5     19.2     15.3       13.1         11.4         39           42       39        37
HCL tech                   752              522      35.7     55.1         60.7    66.2     21.0         13.6     12.4    11.3     13.1      9.1        8.1          7.2         26           32       29        27
Source : Company, HDFC sec Inst Research


                                                   CHANGE IN ESTIMATES
Marginally lower our EBIDTA                                                                                              FY14E                                                        FY15E
                                                   (Rs mn)
                                                                                                              New              Old         % Change                    New                  Old             % Change
margin assumptions for FY14E
                                                   Revenue                                                 719,676         720,391             (0.1)                809,425             811,875                 (0.3)
and FY15E                                          EBIDTA                                                  206,282         208,291             (1.0)                232,803             234,951                 (0.9)
                                                   PAT                                                     152,310         155,412             (2.0)                172,507             177,151                 (2.6)
                                                   Source : HDFC sec Inst Research




                                                                                                                                                                                                             Page | 5
                                                                                                                    TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13


INCOME STATEMENT                                                                             BALANCE SHEET
(Rs mn)                                   FY11      FY12       FY13      FY14E      FY15E    (Rs mn)                               FY11         FY12       FY13      FY14E      FY15E
USD Revenues (USD mn)                 8,186       10,171     11,568     13,327     15,272    SOURCES OF FUNDS
Growth (%)                                29.1      24.2       13.7       15.2       14.6    Share Capital                        2,957        2,957      2,957      2,957       2,957
Average rate                              45.6      48.0       54.5       54.0       53.0    Reserves                          2,42,091      2,92,835   3,83,500   4,55,619   5,37,301
Revenues                           3,73,239      4,88,936   6,29,884   7,19,676   8,09,425   Others                                      -          -          -          -          -
Growth (%)                                24.3      31.0       28.8       14.3       12.5    Total Shareholders Funds          2,45,048      2,95,792   3,86,457   4,58,576   5,40,258
Employee Costs                     1,37,264      1,84,964   2,40,399   2,78,041   3,21,653   Minority Interest                    4,582        5,588      6,953      8,613      10,253
Operating Expenses                 1,24,190      1,59,616   2,09,093   2,35,354   2,54,969   Long Term Debt                       2,233        4,004      4,990      5,190       5,390
                                                                                             Short Term Debt                           316         9        800        800        800
EBIDTA                             1,11,785      1,44,357   1,80,391   2,06,282   2,32,803
                                                                                             Total Debt                           2,549        4,013      5,790      5,990       6,190
EBIDTA (%)                                29.9      29.5       28.6       28.7       28.8
                                                                                             Deferred Taxes                       1,095        1,735      2,355      2,355       2,355
EBIDTA Growth (%)                         28.6      29.1       25.0       14.4       12.9
                                                                                             Long term provisions                 1,392        2,177      3,490      3,890       3,890
Depreciation                          7,353        9,178     10,798     11,589     12,366
                                                                                             TOTAL SOURCES OF FUNDS            2,54,666      3,09,304   4,05,045   4,79,423   5,62,946
EBIT                               1,04,432      1,35,179   1,69,593   1,94,693   2,20,436
                                                                                             APPLICATION OF FUNDS
EBIT Margin(%)                            28.0      27.6       26.9       27.1       27.2
                                                                                             Net Block                           42,470       51,186     62,465     75,876      87,510
Other Income                          6,034        4,281     11,781     10,900     12,000
                                                                                             CWIP                                11,938       14,463     18,953     18,953      18,953
Interest                            (257.5)       (222.3)    (484.5)    (300.0)    (240.0)
                                                                                             Goodwill                            32,320       35,434     35,815     35,815      35,815
PBT                                1,10,208      1,39,237   1,80,890   2,05,293   2,32,196   Investments                         45,418       40,099     43,519     46,519      49,519
Tax                                  18,319       33,997     40,138     51,323     58,049    LT Loans & Advances                 29,534       45,176     52,341     57,574      64,754
PAT                                  91,888      1,05,240   1,40,751   1,53,970   1,74,147   Inventories                               228       177        212        212        212
Minority Interest / Adj               1,210        1,099      1,582      1,660      1,640    Unbilled revenues                   13,488       22,477     31,600     35,984      40,471
APAT                                 90,678      1,04,142   1,39,169   1,52,310   1,72,507   Trade Receivables                   81,949      1,15,203   1,40,765   1,67,596   1,88,496
APAT Growth (%)                           29.5      14.8       33.6         9.4      13.3    Cash & Equivalents                  47,008       60,034     67,691    1,11,970   1,59,318
EPS                                   46.33        53.21      71.11      77.82      88.14    ST Loans & Advances                 20,849       27,130     66,205     68,505      70,805
Source: Company, HDFC sec Inst Research                                                      Other Current Assets                        -          -          -          -          -
                                                                                             Current Assets                    1,63,522      2,25,021   3,06,473   3,84,266   4,59,302
                                                                                             Other Current Liabilities           46,421       72,162     73,150     93,389    1,00,569
                                                                                             Trade payables                      25,723       32,479     44,478     49,293      55,440
                                                                                             Current Liabilities                 72,144      1,04,641   1,17,628   1,42,682   1,56,009
                                                                                             Net Current Assets                  91,378      1,20,380   1,88,845   2,41,584   3,03,293
                                                                                             Misc Expenses                        1,601        2,560      3,102      3,102       3,102
                                                                                              APPLICATION OF FUNDS             2,54,666      3,09,304   4,05,045   4,79,423   5,62,946
                                                                                             Source: Company, HDFC sec Inst Research




                                                                                                                                                                              Page | 6
                                                                                                                    TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13


CASH FLOW                                                                                    KEY RATIOS
(Rs mn)                                   FY11      FY12       FY13      FY14E      FY15E                                              FY11    FY12    FY13    FY14E      FY15E
Reported PAT                         91,888      1,05,240   1,40,751   1,53,970   1,74,147   PROFITABILITY
Non-operating & EO items            (2,137)          638          3           -          -   EBITDA Margin                              29.9    29.5    28.6    28.7        28.8
PAT from Operations                  89,752      1,05,878   1,40,754   1,53,970   1,74,147   EBIT Margin                                28.0    27.6    26.9    27.1        27.2
Interest expenses/income            (4,972)       (7,652)   (10,397)   (10,900)   (12,000)   APAT Margin                                24.3    21.3    22.1    21.2        21.3
Depreciation                          7,326        9,179     10,798     11,589     12,366    RoE                                        42.2    38.5    40.8    36.0        34.5
Working Capital Change             (21,275)      (30,630)   (16,932)   (16,093)   (24,341)   RoCE                                       41.2    37.9    40.1    35.4        34.0
Tax adjustments                     (4,451)       (6,687)    (8,080)          -          -   ROIC                                       68.2    52.9    51.7    46.9        47.7
OPERATING CASH FLOW ( a )            66,380       70,088    1,16,143   1,38,565   1,50,173   EFFICIENCY
Capex                              (18,500)      (20,070)   (26,326)   (25,000)   (24,000)   Tax Rate %                                 16.6    24.4    22.2    25.0        25.0
Free cash flow (FCF)                 47,880       50,018     89,818    1,13,565   1,26,173   Asset turnover (x)                          1.7     1.8     1.8     1.7         1.7
Investments                           3,188       (7,204)   (34,531)    10,900     12,000    Unbilled Revenues                          13.2    16.8    18.3    18.3        18.3
INVESTING CASH FLOW ( b )          (15,312)      (27,274)   (60,856)   (14,100)   (12,000)   Debtor (days)                              80.1    86.0    81.6    85.0        85.0
Share capital Issuance                       -        85        568           -          -   Payables (days)                             25    24.25     25       25          25
Debt Issuance                         (508)         (552)      (492)          -          -   Cash conversion cycle (days)               68.3    78.5    74.9    78.3        78.3
Interest expenses                                                                            Debt/EBITDA (x)                            0.02    0.02    0.02    0.02        0.02
Dividend                           (46,086)      (39,082)   (57,370)   (80,191)   (90,825)   Net D/E                                   (0.3)   (0.2)   (0.2)    (0.3)       (0.3)
FINANCING CASH FLOW ( c )          (46,594)      (39,550)   (57,295)   (80,191)   (90,825)   VALUATION
NET CASH FLOW (a+b+c)                 4,474        3,265     (2,008)    44,274     47,348    EPS (Rs/sh)                                46.3    53.2    71.1    77.8        88.1
Non-operating and EO items            2,137         (638)        (3)          -          -   CEPS (Rs/sh)                               50.1    57.9    76.6    83.7        94.5
effect of chg. in Exchange rate           300      1,190        481           -          -   BV (Rs/sh)                                125.2   151.1   197.5   234.3       276.0
Source: Company, HDFC sec Inst Research                                                      DPS                                        14.0    25.0    32.0    35.0        39.7
                                                                                             P/E                                        31.4    27.4    20.5    18.7        16.5
                                                                                             P/BV                                       11.6     9.6     7.4     6.2         5.3
                                                                                             EV/EBITDA                                  24.7    19.2    15.4    13.3        11.6
                                                                                             EV/Revenues                                 7.4     5.7     4.4     3.8         3.3
                                                                                             Dividend Yield (%)                        1.0%    1.7%    2.2%    2.4%        2.7%
                                                                                             Free Cash Flow yield(%)                   1.7%    1.8%    3.1%    4.0%        4.4%
                                                                                             OCF/EV                                    2.4%    2.5%    4.2%    5.0%        5.6%
                                                                                             FCF/EV                                    1.7%    1.8%    3.2%    4.1%        4.7%
                                                                                             Source: Company, HDFC sec Inst Research


                                                                                                                                                                        Page | 7
                                                                                                                                               TATA CONSULTANCY SERVICES : RESULTS REVIEW 4QFY13




Rating Definitions

BUY                       :   Where the stock is expected to deliver more than 15% returns over the next 12 months' period
OUTPERFORM                :   Where the stock is expected to deliver 0 to 15% returns over the next 12 months' period
UNDERPERFORM              :   Where the stock is expected to deliver (-) 10% to 0% returns over the next 12 months' period
SELL                      :   Where the stock is expected to deliver less than (-)10% returns over the next 12 months' period



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