1. A Report
Tata Consultancy Services
(A Report)
Submitted To:
Dr. Brajesh Kumar
Submitted By:
Sukant Arora
JGU ID: 20100040
March 15, 2011
Sukant Arora Page 1
JGU ID 20100040

2. TATA CONSULTANCY SERVICES
Tata Consultancy Services is a company of Tata Group whose Chairman is Mr. Ratan N Tata.
But there are two more people who are the reason behind company’s growth and
development who are company’s Managing Director & CEO Mr. N Chandrasekaran and
Executive Director & CFO of the company Mr. S Mahalingam.
At TCS people know that their clients need to do more with less, respond quickly to the
markets and get more strategic advantage from IT. TCS uniquely help its clients to tackle
different business challenges. Be it I.T services, business solutions or outsourcing and they
assure a level of certainty unmatched by other players in the field.
TCS has depth and breadth experience and expertise that one needs to achieve business
goals and succeed amidst the fiercest competition. TCS serves many industries which
include: Banking & Financial Services, Government, High Tech, Insurance, Manufacturing,
Media & Information Services, Retail & Consumer Products, Telecom, Travel, and
Transportation & Hospitality.
TCS stresses a lot on Innovation & Research Segmentation and that’s why they differentiate
from the industry. They are pioneer in R&D and has an innovative environment that offers
research based solutions in leading-edge technologies that will helps to meet one’s IT
expectation and support business objectives.
In 2010 TCS has bagged a multi-year deal from British Government to administer National
Employment Savings Trust (NEST) and many other major deals.
Financials: Company’s reported net profit is Rs.5618.51Cr which is more than 100% as in
comparison with year’s 2006 reported net profit. Their current ratio is 1.49 and quick ratio is
1.48.
Its Debt Equity ratio is .01 and the Earning per share is 28.62.
Current Situation in Stock Market:
Price in BSE is Rs.1084.00
Price in NSE is Rs.1086.60
Beta of the stock is .76
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3. YEAR Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
ROR ROR ROR ROR ROR ROR ROR ROR ROR ROR ROR ROR
2005 -0.21% 0.26% 0.17% -1.13% 0.77% 0.09% -0.32% 0.48% 0.27% -0.27% 0.42% 0.53%
2006 -0.09% 0.10% 0.56% 0.22% -0.45% -0.05% -1.94% 0.30% 0.13% 0.32% 0.45% 0.11%
2007 0.24% -0.34% 0.20% 0.15% -0.32% -0.23% 0.15% -0.36% -0.01% -0.08% -0.10% 0.35%
2008 -0.85% 0.06% -0.39% 0.70% 0.64% -0.88% -0.06% -0.11% -0.88% -0.85% 0.31% -0.69%
2009 0.38% -0.28% 0.62% 0.90% 0.74% -1.79% 1.38% 0.03% 0.84% 0.08% 0.48% 0.42%
2010 -0.08% 0.18% 0.12% -0.28% -0.12% 0.06% 0.53% 0.03% 0.46% 0.63% 0.12% 0.37%
YEAR Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Volatility Volatility Volatility Volatility Volatility Volatility Volatility Volatility Volatility Volatility Volatility Volatility
2005 1.46% 1.23% 1.38% 3.05% 1.70% 1.39% 2.06% 1.55% 1.71% 1.73% 1.05% 1.57%
2006 1.27% 1.15% 1.77% 2.70% 2.44% 3.54% 11.56% 0.88% 1.70% 1.59% 1.25% 1.81%
2007 1.70% 1.76% 2.87% 1.92% 1.12% 0.88% 1.99% 1.93% 1.70% 2.06% 1.97% 2.31%
2008 3.39% 2.86% 3.30% 3.53% 2.83% 2.40% 3.67% 1.88% 3.77% 6.68% 4.24% 3.32%
2009 2.80% 2.28% 3.88% 2.75% 5.23% 11.00% 3.95% 2.30% 1.72% 2.08% 1.97% 1.00%
2010 2.27% 1.16% 1.26% 1.45% 2.07% 1.51% 1.90% 1.45% 1.65% 2.24% 1.63% 1.14%
Tata Consultancy Services
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4. 3.50%
3.00%
2.50%
2.00%
1.50%
Rate Of Return 2005
1.00%
Volatility 2005
0.50%
0.00% Mar
Oct
Nov
Aug
Apr
Jun
Jan
Jul
May
Dec
Feb
Sep
-0.50%
-1.00%
-1.50%
In 2005 the stock of TCS did fine, Net return in the year was positive but still there were many
fluctuations in the share price and return of the share as we can see there is certain decline in the
return of the stock in April but it recovered very fast in the month of May and also was very
volatile.TCS opened its office in Portugal to increase its business in more than 33 countries. TCS gave
dividend to its investors four times a year including 3 interim dividends and a final dividend. 350% on
3rd February, 500% on July 6th, 300% on August 18th, and again 300% on October 18th. Effect of this
was not much on the stock prices, but when the company provided the last dividend in the year the
stock price declined gradually.
14.00%
12.00%
10.00%
8.00%
6.00% Rate Of Return 2006
4.00% Volatility 2006
2.00%
0.00%
Nov
Aug
Apr
May
Jul
Dec
Feb
Sep
Mar
Oct
Jun
Jan
-2.00%
-4.00%
In the year 2006 besides the normal return and volatility, there was a stock split on July 28th in the
Ratio of 1:1 but the return on the given date was very negative and it was reduced by -51.13% And
the net return of the stock after the year was also negative. TCS gave dividend to its investors only
once in the year this time in the year of 2006 on January 18th and the dividend was interim and was
300% and this time it caused the stock price to increase by 31 rupees but again this return was
around just 1.88% and the effect was not that significant.
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5. 3.50%
3.00%
2.50%
2.00%
1.50%
Rate Of Return 2007
Volatility 2007
1.00%
0.50%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-0.50%
-1.00%
Year 2007 was the year of High Risk and High Return and the stock was very volatile
throughout the year. In the month of February the stock was very volatile due to the very
High Volume of Trade. As same as the last year the net return of the stock was negative. TCS
gave dividend to its investors four times a year including 3 interim dividends and a final
dividend. 300% on 22nd January, 400%final dividend on June 15th, 300% on July 27th, and
again 300% on October 22nd. The dividend per share was Rs. 3, 4, 3 and 3 respectively.
Effect of this was not much on the stock prices, but when the company provided the last
dividend in the year the stock price declined gradually
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6. 8.00%
7.00%
6.00%
5.00%
4.00%
Rate Of Return 2008
3.00%
Volatility 2008
2.00%
1.00%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-1.00%
-2.00%
As we know the Year 2008 was the year of Global Financial Meltdown, this stock along with
the stock market was a victim of the same. As in the starting of the year itself there was not
much volatility but the stock prices fall down, but as the crisis was getting to the positive
phase this stock again attracted more investors and again the trading volumes become high
and the stock became more volatile in the later part of the year. . TCS gave dividend to its
investors four times a year including 3 interim dividends and a final dividend. 300% on 23rd
January, 500%final dividend on June 18th, 300% on July 31th, and again 300% on October
29th. The dividend per share was Rs. 3, 5, 3 and 3 respectively. Effect of this was not much
on the stock prices, but when the company provided the last dividend in the year the stock
price declined gradually.
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7. 12.00%
10.00%
8.00%
6.00%
Rate Of Return 2009
4.00%
Volatility 2009
2.00%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-2.00%
-4.00%
Though this year 2009 was the year of high volatility and the stock was volatile throughout
the year but a Stock Split took place in the ratio of 1:1 on 16-Jun-09 which caused the
negative returns by -50.73though this year had a positive Net Annual Return. Besides the
stock split in the year. TCS gave dividend to its investors four times a year including 3 interim
dividends and a final dividend. 300% on 28th January, 500%final dividend on June 16th, 200%
on July 27th, and again 200% on October 28th. The dividend per share was Rs. 3, 4, 2 and 2
respectively. This time TCS reduced their dividend percentage and also the dividend per
share. Effect of this was not much on the stock prices, but when the company provided the
last dividend in the year the stock price declined gradually.
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8. 2.50%
2.00%
1.50%
Rate Of Return 2010
1.00%
Volatility 2010
0.50%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-0.50%
The Year 2010 was a normal year in terms of the return of the stock but again throughout
the year the stock was very volatile. But the returns were not as good as they should be
when the stock is a volatile due to there was less trading volume as the markets were not
responding well to the IT industry. But still its net annual return was Positive. . TCS gave
dividend to its investors five times a year including 3 interim dividends a final dividend and a
special dividend. 200% on 27th January, A Special Dividend of 1000% on 15th June, 400%final
dividend on June 15th, 200% on July 29th, and again 200% on November 1st. The dividend per
share was Rs. 2, 10, 4, 2 and 2 respectively. Besides the special dividend given by the
company the effect of this was not much on the stock prices, but when the company
provided the last dividend in the year the stock price declined gradually.
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9. TATA CONSULTANCY SERVICES vs. TATA MOTORS
For the Year 2005
AVERAGE 0.000919177 0.000909983
STANDARD
DEVIATION 0.017593564 0.019945168
CORRELATION 0.285470279
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 0.000919177 0.000309533
0.9 0.1 0.000918257 0.000272731
0.8 0.2 0.000917338 0.000246069
0.7 0.3 0.000916419 0.000229547
0.6 0.4 0.000915499 0.000223165
0.5 0.5 0.00091458 0.000226923
0.4 0.6 0.00091366 0.00024082
0.3 0.7 0.000912741 0.000264858
0.2 0.8 0.000911822 0.000299035
0.1 0.9 0.000910902 0.000343352
0 1 0.000909983 0.00039781
Portfolio Risk
0.00092
P 0.000918
o 0.000916
R 0.000914
r
e 0.000912
t 0.00091 Portfolio Risk
t
f 0.000908
u
o 0 0.00010.00020.00030.00040.0005
r
l
n Portfolio Risk
i
o
This graph tells us that when there the portfolio is created it is beneficial for the investor as along
with the risk it has greater returns.
Efficient Portfolio WEIGHTS
WEIGHT TCS TATAMOTORS PRETURN PRISK
0.587058055 0.412941945 0.09% 0.02%
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10. For the Year 2006
AVERAGE -0.00129646 0.001374684
STANDARD
DEVIATION 0.049739272 0.025359826
CORRELATION 0.261354787
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 -0.00129646 0.002473995
0.9 0.1 -0.001029346 0.002069707
0.8 0.2 -0.000762231 0.001714575
0.7 0.3 -0.000495117 0.001408599
0.6 0.4 -0.000228002 0.001151778
0.5 0.5 3.91122E-05 0.000944113
0.4 0.6 0.000306227 0.000785603
0.3 0.7 0.000573341 0.000676249
0.2 0.8 0.000840455 0.000616051
0.1 0.9 0.00110757 0.000605008
0 1 0.001374684 0.000643121
Portfolio Risk
0.20%
P
0.15%
o
R 0.10%
r
e
t 0.05%
t
f
u 0.00% Portfolio Risk
o
r -0.05%0.00% 0.10% 0.20% 0.30%
l
n
i -0.10%
o -0.15%
Portfolio Risk
When the more risk is there in the portfolio it generates negative returns.
Efficient Portfolio
WEIGHT WEIGHT
TCS TATAMOTORS PRETURN PRISK
0.12753507 0.872464926 0.10% 0.06%
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11. For the Year 2007
AVERAGE -0.000594323 -0.000909001
STANDARD
DEVIATION 0.018813046 0.021333522
CORRELATION 0.404905412
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 -0.000594323 0.000353931
0.9 0.1 -0.000625791 0.000320487
0.8 0.2 -0.000657259 0.000296723
0.7 0.3 -0.000688727 0.00028264
0.6 0.4 -0.000720194 0.000278238
0.5 0.5 -0.000751662 0.000283517
0.4 0.6 -0.00078313 0.000298476
0.3 0.7 -0.000814598 0.000323116
0.2 0.8 -0.000846066 0.000357436
0.1 0.9 -0.000877534 0.000401437
0 1 -0.000909001 0.000455119
Portfolio Risk
0.00%
P 0.00% 0.02% 0.04% 0.06%
o -0.02%
R
r
e
t -0.04%
t
f
u Portfolio Risk
o -0.06%
r
l
n -0.08%
i
o
-0.10%
Portfolio Risk
It shows that it is not beneficial to invest in a portfolio as the return is always negative.
Efficient
WEIGHT Portfolio
WEIGHT TCS TATAMOTORS PRETURN PRISK
0.604526303 0.395473697 -0.07% 0.03%
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12. For the Year 2008
AVERAGE -0.003230481 -0.006376204
STANDARD
DEVIATION 0.036248176 0.040313501
CORRELATION 0.452331562
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 -0.003230481 0.00131393
0.9 0.1 -0.003545053 0.001199513
0.8 0.2 -0.003859626 0.001117439
0.7 0.3 -0.004174198 0.001067707
0.6 0.4 -0.00448877 0.001050318
0.5 0.5 -0.004803342 0.001065271
0.4 0.6 -0.005117915 0.001112567
0.3 0.7 -0.005432487 0.001192206
0.2 0.8 -0.005747059 0.001304188
0.1 0.9 -0.006061631 0.001448512
0 1 -0.006376204 0.001625178
Portfolio Risk
0.00%
P 0.00% 0.05% 0.10% 0.15% 0.20%
o -0.20%
r
r
e -0.40%
t
t Portfolio Risk
f
u -0.60%
o
r
l
n -0.80%
i Portfolio Risk
o
It depicts the same as the return is negative with the risk of the portfolio and is not considered as
a wise decision to invest.
Efficient Portfolio WEIGHT
WEIGHT TCS TATAMOTORS PRETURN PRISK
0.596234567 0.403765433 -0.45% 0.11%
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13. For the Year 2009
AVERAGE 0.001702968 0.00634404
STANDARD
DEVIATION 0.053014525 0.041796854
CORRELATION 0.178422879
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 0.001702968 0.00281054
0.9 0.1 0.002167075 0.002365171
0.8 0.2 0.002631183 0.001995139
0.7 0.3 0.00309529 0.001700442
0.6 0.4 0.003559397 0.001481082
0.5 0.5 0.004023504 0.001337058
0.4 0.6 0.004487611 0.001268369
0.3 0.7 0.004951719 0.001275017
0.2 0.8 0.005415826 0.001357001
0.1 0.9 0.005879933 0.001514321
0 1 0.00634404 0.001746977
Portfolio Risk
0.80%
P
0.60%
o
R
r 0.40%
e
t 0.20%
t Portfolio Risk
f
u 0.00%
o
r 0.00% 0.10% 0.20% 0.30%
l
n
i Portfolio Risk
o
In this along with the greater portfolio risk there is greater return but if somebody wants to invest
then he has to check his proportion of the stocks in the portfolio as if the weights of one stock are
increased it can cause loss also.
Efficient Portfolio WEIGHT
WEIGHT TCS TATAMOTORS PRETURN PRISK
0.358824215 0.641175785 0.47% 0.13%
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14. For the Year 2010
AVERAGE 0.001748061 0.00183021
STANDARD
DEVIATION 0.016524223 0.023401932
CORRELATION 0.357969168
WEIGHTS
TCS WEIGHTS TATAMOTORS PRETURN PRISK
1 0 0.001748061 0.00027305
0.9 0.1 0.001756276 0.000251564
0.8 0.2 0.001764491 0.000240954
0.7 0.3 0.001772706 0.000241222
0.6 0.4 0.001780921 0.000252367
0.5 0.5 0.001789136 0.000274388
0.4 0.6 0.00179735 0.000307287
0.3 0.7 0.001805565 0.000351062
0.2 0.8 0.00181378 0.000405715
0.1 0.9 0.001821995 0.000471244
0 1 0.00183021 0.00054765
Portfolio Risk
0.18%
P
0.18%
o
R 0.18%
r
e
t 0.18%
t
f Portfolio Risk
u 0.18%
o
r
l 0.17%
n
i 0.00% 0.02% 0.04% 0.06%
o
Portfolio Risk
Its shows that this is a good portfolio to invest in as the return with the risk is high.
Efficient
WEIGHT
Portfolio WEIGHT TCS TATAMOTORS PRETURN PRISK
0.75246071 0.24753929 0.18% 0.02%
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15. PORTFOLIO RETURN WHEN THREE
COMPANIES ARE CONSIDERED
WEIGHTS TCS WEIGHTS TATAMOTORS WEIGHTS TATA STEEL PRETURN PRISK
1 0 0 0.000919177 0.000309533
0.7 0.2 0.1 0.000817808 0.000220715
0.6 0.1 0.3 0.000619667 0.000206507
0.5 0.3 0.2 0.000717359 0.000197752
0.4 0.2 0.4 0.000519218 0.000195597
0.3 0.5 0.2 0.00071552 0.000215974
0.3 0.2 0.5 0.000419688 0.000204206
0.3 0.4 0.3 0.000616909 0.000203844
0 0.2 0.8 0.000121098 0.000280978
0.1 0.6 0.3 0.00061507 0.000252768
0 1 0 0.000909983 0.00039781
Portfolio Risk
0.001
0.0009
0.0008
0.0007
0.0006
0.0005
Portfolio Risk
0.0004
0.0003
0.0002
0.0001
0
0 0.0001 0.0002 0.0003 0.0004 0.0005
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16. Beta Values
Year 2005
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.597960418
R Square 0.357556661
Adjusted R Square 0.354966164
Standard Error 0.014130095
Observations 250
ANOVA
df
Regression 1
Residual 248
Total 249
Coefficients
Intercept -0.000191983
X Variable 1 0.946364856
Year 2006
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.342942131
R Square 0.117609305
Adjusted R Square 0.114036873
Standard Error 0.046817395
Observations 249
ANOVA
df
Regression 1
Residual 247
Total 248
Coefficients
Intercept -0.002686424
X Variable 1 1.031653124
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17. Year 2007
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.601319603
R Square 0.361585265
Adjusted R Square 0.358990083
Standard Error 0.015062307
Observations 248
ANOVA
df
Regression 1
Residual 246
Total 247
Coefficients
Intercept -0.001807317
X Variable 1 0.705404576
Year 2008
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.668701815
R Square 0.447162118
Adjusted R Square 0.444887065
Standard Error 0.02700703
Observations 245
ANOVA
df
Regression 1
Residual 243
Total 244
Coefficients
Intercept -0.000661628
X Variable 1 0.86140481
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18. Year 2009
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.330500204
R Square 0.109230385
Adjusted R Square 0.105518845
Standard Error 0.050139555
Observations 242
ANOVA
df
Regression 1
Residual 240
Total 241
Coefficients
Intercept -0.000119217
X Variable 1 0.817881085
Year 2010
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.508462962
R Square 0.258534584
Adjusted R Square 0.255556811
Standard Error 0.014257285
Observations 251
ANOVA
df
Regression 1
Residual 249
Total 250
Coefficients
Intercept 0.001228793
X Variable 1 0.819226819
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19. Year Beta Intercept
2005 0.946365 -0.00019
2006 1.031653 -0.00269
2007 0.705405 -0.00181
2008 0.861405 -0.00066
2009 0.817881 -0.00012
2010 0.819227 0.001266
Industry Beta= .77
1.2 0.0015
0.001
1
0.0005
0.8 0
-0.0005
0.6 Beta
-0.001
Intercept
0.4 -0.0015
-0.002
0.2
-0.0025
0 -0.003
2005 2006 2007 2008 2009 2010
From the data, we observe that the company has almost has same value of Beta from linear
regression technique and Normal computation using Covariance between return on company
stock and the market return and, the variance in the market return.
This is because of the fact that the relationship between the changes in returns of the
company with respect to changes in the market returns is a constant. Here the Beta value of
the stock is different from year to year because here the market is driving the stock not vice
versa. The beta of the stock was in sync of the industry and was going in the same direction
of the industry and the other stocks of the company.
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