Views on Tata Consultancy Services Limited 3QFY2017 Results: Angel Broking

Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking) on Tata Consultancy Services Limited 3QFY2017 Results:

"TCS posted numbers slightly better than expected, on the sales and EBIT front. The company posted a 0.3% sequential growth in USD revenues to US$4,387mn V/s US$4,383mn expected. On Constant currency terms, the growth came in at 2.0%. Volume growth during the quarter came in at 1.0% QoQ. In rupee terms, revenues came in at INR 29,735cr V/s INR 29,588cr expected, up 1.5% QoQ.

In terms of the Verticals, the key Verticals like BFSI (which posted a 2.1% QoQ CC growth), Retail & CPG (which posted a 1.9% QoQ CC growth and Manufacturing (which posted a 2.1% QoQ CC growth. Amongst the key verticals, Communication & Media (posted a QoQ CC de-growth of 4.9%). Energy and Utilities posted a 5.8% QoQ CC growth.

In terms, of geography, the USA was the main driver with North America and Latin America posting a QoQ CC growth of 2.2% and 12.5% respectively. In Europe, UK posted a QoQ CC growth of 1.7%, while Continental Europe posted a QoQ CC de-growth of 1.1%. India posted a QoQ CC growth of 10.3%.

In terms, of client additions the company added in 2 clients in $50M+ revenue band and in 5 clients in $10M+ revenue band. LTM attrition of the company came down further QoQ to 11.3% in IT Services.

On EBIT front, the company posted an EBIT of 26.0% V/s 25.5% expected, flat QoQ. Consequently, PAT came in at INR 6,778cr V/s INR 6,320cr expected, a growth of 2.9% QoQ. Apart from, the margin coming in better than expected, higher other income, aided the net profit to come in higher than expected. We maintain our ACCUMULATE rating on the stock, with a price target of INR 2,620."

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2258.55 as compared to the previous close of Rs. 2252. The total number of shares traded during the day was 144740 in over 5667 trades.

The stock hit an intraday high of Rs. 2273.9 and intraday low of 2230. The net turnover during the day was Rs. 326822191.

Source : Equity Bulls

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