2026-03-13 15:44:39
Latest Post
Kalpataru Ltd. signs redevelopment project in Andheri West with ~₹1,400 crore GDV potential
Kotyark Industries receives final listing & trading approval from NSE and BSE for Migration/Direct Listing to the Main Board
Retaggio Industries Allots 3.02 Lakh Shares on Warrant Conversion
Natural Biogenex and Fermbox Bio Enter Strategic Framework and Manufacturing Agreements to Strengthen Fermentation-Based CDMO Capabilities
Sical Logistics Allots 1.45 Cr Rights Equity Shares
Research
TCS - Strong performance in weak season... - Microsec
Posted On : 2014-01-20 21:12:09( TIMEZONE : IST )
Strong business volumes, improved realization fueled top line growth. TCS reported a healthy 1.5% sequential increase in top line to Rs. 21,294.0 Crores in Q3 FY2014. The growth in top line was contributed by a combination of 1.8% increase in volumes and 74 basis points improvement in realizations. These factors helped the company to post 3.0% q-o-q growth in $ top line to $3,438 Mn. However, currency that remained supportive in TCS' incremental top line in Rs. terms during last couple of quarters, acted as a dampener this time. As a result, despite an impressive $ growth, in a seasonally weak quarter, the company's sequential Rs. top line growth remained limited to 1.5%. Furthermore, the 1.8% increase in business volumes was led by its healthy deal pipeline and rise in number of clients in $20M+ category to 129 from 125. In addition, while TCS reported a 3.8% sequential increase in $ international revenues, its performance at home remained sluggish during the quarter.
Among the geographies, MEA, with 9.8% sequential increase in top line remained the top performing region followed by Continental Europe (5.9%), and Asia Pacific (5.3%). Furthermore, TCS' top line performance remained healthy in Americas, where its revenues rose 0.6% sequentially to Rs. 11,712 Crores in Q3 FY2014. In addition, strong performance across UK and Continental Europe lifted the revenues from Europe by 3.6% q-o-q, to Rs. 6,197 Crores. While revenues from Rest of the World (RoW) expanded 7.1% sequentially to Rs. 2,044 Crores, Indian sales declined 7.3%, q-o-q, to Rs. 1,342 Crores during the quarter.
While Americas contributed 55.0% of TCS' total sales realization, Europe represented 29.1% of the company's top line in Q3 FY2014. India and Rest of the World contributed 6.3% and 9.6%, respectively, of TCS' sales during the quarter. With this, TCS' geographical revenue distribution changed significantly in Q3 FY2014 vis-Ã -vis Q2 FY2014 and Q3 FY2013.
Total clients in the company's $1M+ category increased from 687 in Q2 FY2014 to 711 in Q3 FY2014. Furthermore, continuing with its innovation initiatives, TCS has applied for 1,535 patents until now. Of these, 94 applications were filed in Q3 FY2014. The company currently holds 102 patents.
Amongst the business verticals, Banking, Financial Services, and Insurance (BFSI) continue to dominate TCS' top line pie with 42.7% share followed by Retail & Distribution (13.8%), Telecom (9.6%), and Manufacturing (8.8%) domains. The company reported a healthy growth, on a sequential basis, across all business verticals, except Hi-Tech, during Q3 FY2014. In Manufacturing, Media and Entertainment, and Life Sciences and Health Care segments, the top line expansion was steeper. These verticals reported over 5% sequential top line increases during the quarter. With this, TCS also witnessed a notable change in its business wise revenue mix. The following exhibit reflects the business wise breakup of the company's total income in Q3 FY2014 vis-Ã -vis Q2 FY2014 and Q3 FY2013.
With this, we reiterate our target price for TCS at Rs. 2,458. Our target price represents an upside of 10.9% from CMP of Rs. 2,215.65. Going forward, if TCS maintains its performance, we continue to believe that the company has a potential to become the highest profit generating company of the country in next three to five years, surpassing Reliance Industries and ONGC.
