TCS stock has given 3,000% return since IPO, says N Chandrasekaran

For FY21, TCS has returned Rs 33,873 crore in dividends and buyback to shareholders, resulting in a payout of 95 per cent of free cash flow.

Tata Consultancy Services (TCS) has weathered the pandemic very well, and has earned tremendous goodwill from customers, which enhanced the firm’s standing in the market, N Chandrasekaran, chairman, said in his virtual address of the 26th Annual General Meeting on Thursday.

He said TCS shareholders received over 3,000 per cent return on their investments since the company was listed in 2004.

“If invested Rs 850 per share in the IPO of 2004, the value of that investment today would be Rs 28,000 crore. A return of over 3,000 per cent,” Chandrasekaran said.

On the performance of the company, he said barring the first quarter of the fiscal year, the company delivered a sharp recovery.

For FY21, TCS has returned Rs 33,873 crore in dividends and buyback to shareholders, resulting in a payout of 95 per cent of free cash flow.

Chandrasekaran said while Covid-19 disrupted life, it also brought positive changes and new opportunities for TCS.

“Almost a decade of advantage has come in because the world is shifting to digital,” he said, adding, “Covid is going to impose sustainability in a big way. All companies will be moving towards adopting this.”

He said global supply chains were getting redesigned as not just-in-time, but also just-in-case, “this means focus on resilience and all these are providing significant opportunity for TCS”, said Chandrasekaran.

He said TCS contributed Rs 273 crore towards Covid-19 relief work, including building capacity for 200 doctors across 22 hospitals, distribution of 2.5 million meals to doctors and medical professionals.

TCS also trained health workers and spread awareness among rural population, impacting the lives of over 450,000 people.

Expressing his gratitude towards the founder and CEO of TCS for 27 years, F C Kohli, he said, “Shri Kohli is a true legend who laid the very foundation for India’s spectacular IT revolution and set the stage for the dynamic modern economy.

"I express a deep gratitude to his indefatigable, influential spirit for shaping TCS and the fabric of TCS culture.”

Rajesh Gopinathan, CEO and MD, said, “Over the last five years, we have grown at an annual rate of 8.6 per cent growing from Rs 1.18 trillion in FY17 to Rs 1.64 trillion in FY21.

"Through these years, we have maintained our profitability going from an operating margin of 25.7 per cent in FY17 to 25.9 per cent in FY21, in terms of total cash generated."

In terms of capital allocation, Gopinathan said they continued to focus on providing a shareholder-friendly capital allocation policy, wherein 82.6 per cent of capital was used for shareholder payouts either through a buyback or dividend, while about 7.5 per cent was used on capex, and 9.7 per cent kept as surplus invested funds.

Gopinathan also said the nature of technology investments is the start of a multi-year technology upgrade cycle.

Photograph: PTI Photo