Views on TCS 4QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on TCS 4QFY2016 Results:

TCS (CMP: INR 2,522/ TP: INR 2,854 / Upside: 13.2%)

"TCS announced its 4QFY2016 results. The company, posted revenue of US$4,207mn V/s US$4,215mn expected with 1.5% QoQ growth, mostly volume led, which came in at 3.2% QoQ. In Constant Currency Terms (CC) the company posted a QoQ growth of 2.1%. In rupee terms, revenues grew by 4.0% QoQ to INR 28,448cr V/s INR 28,454cr expected, lead by rupee deprecation.

In terms of geography, the company posted a CC growth of 2.4% in USA, 1.8% in Latin America, UK a dip of 0.4%, continental Europe growth of 3.6%, India a growth of 2.2%, Asia Pacific a growth of 1.1% and MEA a growth of 9.5%. In terms of vertical, the company posted a CC growth of 3.2% in BSFI, Retail & Distribution a growth of 2.1%, manufacturing a growth of 3.9%, Telecom a growth of 1.3%, Energy & Utilities a growth of 3.0%.

In terms of EBIT margins, the company posted a 26.1% V/s 26.7% expected. PAT came in at INR 6,341cr V/s INR 6,201cr expected, up 3.8% QoQ sequentially. The better than expected net profit came in on back of higher than expected other income. On the operating matrix, the attrition was 14.7% in IT services. In terms of client additions, the clients in $100M+ revenue band increased by 3, in $50M+ revenue band by 8 and in $10M+ revenue band by 17.

Going into FY2017, the company expects a stronger year, than FY2016, where it clocked a CC growth of 11.9%. The key headwinds in industries like Energy and BFSI segment has bottomed out and company given its client additions expects a strong FY2017. On EBIT, the company has guided it to be around 26-28% for FY2017. We maintain our ACCUMULATE rating on the stock with target price of INR 2,854."

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2522.4 as compared to the previous close of Rs. 2523.15. The total number of shares traded during the day was 226212 in over 17073 trades.

The stock hit an intraday high of Rs. 2553.15 and intraday low of 2449. The net turnover during the day was Rs. 565906845.

Source : Equity Bulls

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