TCS - 2011-12 Annual Report Update - Motilal Oswal

Citing huge potential; thrust on non-linear growth

Industry-leading growth in FY13 too, but valuations appear stretched

- TCS remains convinced of the huge potential for growth, given the large and steadilyexpanding addressable market, and the relatively low current level of penetration.

- It is pursuing three strategic initiatives to drive non-linear growth - Software Products (TCS Financial Solutions), Platform-based BPO, and iON.

- TCS has maintained EBITDA margin within a narrow band over FY05-12; its payout ratio has steadily increased from 27.6% in FY05 to 37.2% in FY12.

- The company is set to lead revenue growth in FY13 too, but valuations factor in the high growth expectations. Maintain Neutral.

Source : Equity Bulls

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