Tata Consultancy Services Ltd.
ISIN: INE467B01029 • Market Cap: ₹8.27 Lakh Cr
The 5-Pillar Quality Audit for Tata Consultancy Services Ltd.
Evaluated across Profitability, Financial Health, Historical Compounding, Valuation Safety, and Ownership Governance:
1. Profitability & Capital Efficiency
Weight: 25%Measures operating margins (26.9%), Return on Capital Employed (60.9%), and equity compounding (45.9%).
2. Financial Health & Solvency
Weight: 25%Debt-to-Equity is 0.00 with comfortable interest coverage and clean working capital.
3. Growth & Compounding Track Record
Weight: 20%Historical 3Y Sales CAGR (4.6%) and 3Y PAT CAGR (2.9%).
4. Valuation Multiple & Margin of Safety
Weight: 15%Trades at P/E of 16.62 vs PEG of 1.40 and Dividend Yield of 4.8%.
5. Ownership Quality & Governance
Weight: 15%Promoter holding stands at 71.8%, backed by 22.5% institutional ownership.
Key Fundamental Strengths
Superior Capital Efficiency (ROCE: 60.9%)
Tata Consultancy Services Ltd. generates exceptional return on capital employed of 60.9%, reflecting pricing power and competitive moat.
Robust Equity Compounding (ROE: 45.9%)
Shareholder equity compounds at a healthy 45.9%, exceeding average Indian equity benchmarks.
Fortress Balance Sheet (D/E: 0.00)
The company operates virtually debt-free, shielding net margins from interest rate cycles and monetary tightening.
Attractive Valuation Margin (P/E: 16.62)
Trading at a P/E multiple of 16.62, the stock offers a favourable risk-reward entry for quality compounding.
Areas to Watch & Potential Risks
Topline Stagnation (3Y Sales CAGR: 4.6%)
Revenue growth has slowed below inflation rates, indicating cyclical demand slowdown or saturated core markets.
Sectoral & Macro Headwinds (Information Technology)
Subject to broader cyclical demand, raw material price shifts, and regulatory frameworks governing the Information Technology space.
Quantitative Strategy Eligibility
Checking TCS against established Indian wealth creation frameworks:
Coffee Can Investing Framework
Fails 10%+ revenue growth or 15%+ minimum capital return benchmark over historical periods.
Quality Factor Screener (High RoIC + Low Debt)
Qualifies for Indian Quality Indices with overall score of 79/100 and clean gearing.
GARP / Value-Growth Blend
Provides balanced valuation margin with strong profitability scores.
Information Technology Sector Peer Comparison
Compare TCS directly against top industry peers by market capitalization:
| Company | 5-Pillar Score | Market Cap | P/E | ROCE | D/E | Scorecard |
|---|---|---|---|---|---|---|
| Tata Consultancy Services Ltd. (TCS)Current | 79/100 | ₹8.27 Lakh Cr | 16.62 | 60.9% | 0.00 | — |
| Infosys Ltd. (INFY) | 78/100 | ₹4.53 Lakh Cr | 14.97 | 41.1% | 0.00 | View |
| HCL Technologies Ltd. (HCLTECH) | 75/100 | ₹3.59 Lakh Cr | 20.60 | 28.7% | 0.00 | View |
| Wipro Ltd. (WIPRO) | 71/100 | ₹1.78 Lakh Cr | 13.45 | 18.7% | 0.19 | View |
| Tech Mahindra Ltd. (TECHM) | 75/100 | ₹1.55 Lakh Cr | 30.20 | 22.0% | 0.00 | View |
| LTM Ltd. (LTM) | 77/100 | ₹1.35 Lakh Cr | 25.72 | 28.7% | 0.00 | View |
Frequently Asked Questions: Tata Consultancy Services Ltd.
Q:What is the 5-Pillar Fundamental Score for Tata Consultancy Services Ltd. (TCS)?
Tata Consultancy Services Ltd. has a RupeeTools Fundamental Score of 79/100, placing it in the 'Solid & Healthy' category. Its pillar scores are: Profitability (99/100), Financial Health (83/100), Growth (40/100), Valuation (87/100), and Ownership Quality (82/100).
Q:Is TCS fundamentally strong for long-term investment?
Yes, TCS exhibits solid fundamental strength with a 79/100 score, driven by a return on equity of 45.9% and a debt-to-equity ratio of 0.00.
Q:Does TCS pass the Coffee Can Investing filter?
No. TCS does not currently meet the strict 15% ROCE and 10% sustained topline compounding threshold mandated by the Coffee Can investing framework.
Q:How does TCS compare against other Information Technology peers?
Within India's Information Technology sector, TCS trades at a P/E of 16.62 and generates an ROCE of 60.9%. Compare its 5-Pillar score of 79/100 against top sector peers like Infosys Ltd. (78/100), HCL Technologies Ltd. (75/100).
Regulatory & SEBI Research Analyst Compliance Disclaimer:
This 5-pillar fundamental score is an automated quantitative health check generated purely from historical public financial statements, corporate filings, and exchange disclosures for educational and informational purposes only. It does NOT constitute investment advice, a stock recommendation, or a solicitation to buy or sell securities. RupeeTools is not a SEBI-registered Research Analyst. Please consult a SEBI-registered financial advisor before making investment decisions.