TCS - 3QFY2014 result - Angel Broking

Views of Ms. Ankita Somani (Research Analyst - IT, Angel Broking) on TCS 3QFY2014 results:

"TCS reported its 3QFY2014 results with revenues as operating margin coming in a bit lower than expectations while net profit stood higher than estimates on account of healthy forex gains. The dollar revenue grew by 3.0% qoq to US$3,438mn. The company registered volume growth of 1.8% qoq which was a bit disappointing. The company's performance was impacted due to ~9% sequential decline in Indian business revenues; international business revenues grew modestly by 3.8% qoq in USD terms. Excluding India business, volume growth was better than expectations at 2.9% qoq. In INR terms, revenue came in at Rs. 21,294cr, up 1.5% qoq. EBIT margin of the company declined by 42bp qoq to 29.7% as the company increased its S&M investments. With this level of operating margin, now the margin gap between TCS and Infosys have widened by more than 450bp. Bottomline of company grew substantially by 13% qoq to Rs. 5314cr, supported by forex gain of Rs. 299cr as against loss of Rs. 377cr in 2QFY2014.

TCS closed 8 large deals during 3QFY2014. Management sounded confident of growing higher than the industry. Management indicated that the company has a robust demand pipeline across markets and the company see a unique opportunity to strategically partner and participate with clients but India business will continue to be soft for next 2-3 quarter due to impending elections. TCS increased its gross hiring target for FY2014 to 55,000 from 50,000 earlier. We continue to remain positive on TCS remain positive on for a longer-term perspective keeping in notice the company's consistent performance and healthy operating performance."

Source : Equity Bulls

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