TCS - Q3FY14 Results - Kotak

Results were in line with estimates. The CC revenue growth, at 2.1%, was impacted by seasonality and the India business. International revenues grew at 2.9% in CC terms. Consistent high revenue growth over the past few quarters reflects effective demand generation initiatives and efficient execution. Margins have come in slightly lower QoQ due to the rupee and additional S&M expenses. The management has maintained its optimism on the demand scenario, backed by higher clarity and no delays in decision making by clients, and timely scale-ups.

Based on the interactions with clients, management expects FY15 growth to be better than FY14, which is enthusing. We expect FY15 USD revenue growth to be 15.5% (16% in FY14E). We have been maintaining our positive view on medium term demand growth, over the past few quarters. Our earnings estimates for FY14 and FY15 stand at Rs.96.7 per share (Rs.93 earlier) and Rs.113 per share (Rs.107.9). We accord a premium to TCS as compared to peers. In the past several quarters, TCS has reported industry - leading growth rates with sustained margins.

We revise PT to Rs.2505 (Rs.2338), based on FY15E estimates. The stock has risen sharply in the recent weeks. Looking at the limited upside, we maintain ACCUMULATE.

Source : Equity Bulls

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