Accumulate TCS - Dolat Capital

Remains one of our preferred picks, even as it has had sustained outperformance over the year led by better revenue CQGR of 5.4% over Q1FY11-Q2FY13 (Infy - 4%; Wipro - 3.5%). We expect this momentum to carry it through for next few quarters at least

- The management continues to remain overall confident in its commentary, and has witnessed uptick in the discretionary demand primarily in the BFSI segment. It is also seeing incremental spend in the digital space but sees some time gap for platform driven revenues picking momentum. Healthy pipeline and strong deal win ratio provide the much needed comfort for medium term visibility.

- TCS has managed to maintain its OPM in a narrow band of 26-28% over last ten quarters indicating strong margin resilience capability despite volatile forex, wage hikes through productivity gains, utilizations improvement (80% plus throughout the period).

- We maintain TCS as our Top Pick among Tier I IT space and expect it maintain its outperformance over peers in the near term with a Target price of INR 1500 valued at 19xFY14E.

Source : Equity Bulls

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