Tata Consultancy Services (ADD) - Quarterly estimates - ICICISecurities

- Expect consolidated USD revenue to grow 3.9% QoQ to USD3,159mn with cross-currency impact of ~60bps QoQ. For comparison, sequential revenue growth in Q3FY13 was 3.1%. ALTI will be consolidated Q2FY14 onwards and we expect it to contribute ~US$42mn on a quarterly basis. Overall for FY14, H1 is expected to be better than H2.

- Expect EBIT margin to remain stable QoQ at 26.5% primarily due to the currency benefit (~3.4% QoQ depreciation in the Rupee v/s INR) and absence of one time litigation related expense in Q4FY13. The offsets being wage hikes which will impact margins by 200-250bps QoQ and visa costs which will be incurred in Q1FY14.

- Expect forex gain of ~Rs150mn in the quarter (primarily due to asset translation benefits) against ~Rs1,230mn forex gain in the previous quarter.

- Key factors to watch: i) Performance in the BFSI segment and in Europe, where TCS has a higher exposure than peers, ii) commentary on discretionary spends and iii) pricing commentary.

Source : Equity Bulls

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