TCS - 3QFY2013 Result Review - Angel Broking

TCS (CMP: Rs.1,334 / TP: Under review)

TCS reported yet another healthy quarterly result, outperforming street as well as our expectations on the operating margin as well as profit front. The dollar revenue grew by 3.3% qoq to US$2,948mn. In INR terms, revenue came in at Rs.16,070cr, up 2.9% qoq. Volume growth was though muted at 1.25% qoq. TCS's EBITDA and EBIT margin improved by 53bp and 50bp qoq to 29.0% and 27.3%, respectively, against street expectation of a qoq decline. The bottom-line of the company grew by ~1% qoq to Rs.3,552cr.

TCS closed 7 large deals during 3QFY2013. These deals span industry segments as well as geographies. Management sounded confident of growing higher than the industry. Also, the company raised its gross hiring target by ~9,000 people for FY2013 which instills confidence in the deal pipeline of the company. Management indicated that they expect CY2013 to be better than CY2012 in terms of IT spending. Also, the company kept its campus hiring target of 25,000 people for FY2014 unchanged. We remain positive on TCS which has been a consistent performer since couple of years and maintain Accumulate rating on the stock. The target price is under review.

Source : Equity Bulls

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