TCS - Q4FY13 Result Review - Angel Broking

TCS reported inline set of results for 4QFY2013. The dollar revenue grew by 3.1% qoq to US$3,040mn. In INR terms, revenue came in at Rs. 164,301cr, up 2.2% qoq. Volume growth stood robust at 4.4%, ahead of its peers. TCS's EBITDA and EBIT margin declined by 60bp and 73bp qoq to 28.4% and 26.5%, respectively, against our expectation of ~50bp decline. Bottomline of company grew by 1.3% qoq to Rs. 3,597cr, aided by Rs. 419cr of other income.

TCS closed 11 large deals during 4QFY2013. These deals span industry segments as well as geographies. Management sounded confident of growing higher than the industry. Management indicated that they expect CY2013 to be better than CY2012 in terms of IT spending and the company has given hiring target of 45,000 gross employees for FY2014 which is encouraging. TCS, unlike its peers, has announced wage hike for its employees - 7% for Indian employees, 2-4% for onsite employees and 4-6% for employees in other developing nations. Healthy set of results by TCS and HCL Tech shrug off any concerns regarding health of the Indian IT industry which were raised due to weak performance by Infosys.

We remain positive on TCS which has been a consistent performer since couple and maintain Accumulate rating on the stock. The target price is under review.

Source : Equity Bulls

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