Views on Tata Consultancy Services Limited 1QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking) on Tata Consultancy Services Limited 1QFY2017 Results:

"TCS posted results below expectations on the sales front while the net profit growth came in higher than expected on back of better expected EBIT and better than expected other income.

The company posted 3.7% sequential growth in USD revenues to US$4,362mn V/s US$4,375mn expected, mostly volume lead (3.4% QoQ growth). On Constant Currency (CC), the company posted a 3.1% QoQ growth. In rupee terms revenues came in at INR 29,305cr V/s INR 29,362cr expected, up 3.0% QoQ.

In terms of geography, USA posted CC QoQ growth of 2.5% while Latin America posted CC QoQ growth 0.3%. In Europe - UK (3.8%) CC QoQ growth while Continental Europe 4.6% CC QoQ growth. India posted an 8.5% CC QoQ growth. Asia Pacific posted a 1.3% CC QoQ growth, while MEA posted a 3.3% CC QoQ growth.

In terms of verticals BFSI posted CC QoQ growth of 1.7%, Retail & CPG CC QoQ growth of 2.7%, Communication & Media posted CC QoQ growth of 7.0%, Manufacturing posted CC QoQ growth of 3.1%, Life Sciences & Healthcare posted CC QoQ growth of 3.9%, Energy & Utilities posted CC QoQ growth of 7.4%, Travel & Hospitality posted CC QoQ growth of 8.6% and Hi-Tech posted CC QoQ de-growth of 0.3%.

On the operating front the EBITDA and EBIT margins came in at 26.7% and 25.1% a dip of ~97 bps and ~98bps QoQ respectively, mostly in line with expectations. Consequently, PAT is expected to be at INR 6,317cr V/s INR 6,151cr expected, de-growth of 0.4% QoQ. In terms, of client addition, during the quarter 4 were added in US $50mn+ and 6 in US $20mn+ revenue band. LTM attrition down further QoQ to 13.6% in IT services. We maintain our BUY rating on the stock with a target price of INR 3,004."

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2618.55 as compared to the previous close of Rs. 2615.55. The total number of shares traded during the day was 42324 in over 3878 trades.

The stock hit an intraday high of Rs. 2632 and intraday low of 2599.2. The net turnover during the day was Rs. 110833274.

Source : Equity Bulls

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