Views on Tata Consultancy Services Limited 1QFY2018 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking):

TCS (CMP: INR 2,444/ TP: INR 2,651/Upside: 8.5%)

"TCS, results were below expectations on the EBIT and net profit front. The company posted 3.1% sequential growth in USD revenues to US$4,591mn V/s US$4,585mn expected, mostly volume lead (3.5%). On Constant Currency terms, the company posted a 2.0% QoQ growth. In rupee terms, revenues are expected to come in at INR 29,548cr V/s INR 29,600cr expected, down 0.2%. QoQ.

In terms, of geography Latin America and Continental Europe posted a QoQ growth of 2.8% and 5.9% respectively. Its key market USA posted a QoQ growth of 1.7%. India and Asia Pacific posted a QoQ growth of 1.5% and 1.2% respectively.

On profitability the EBIT margins, came in at 23.4% V/s 24.2% expected, posting a QoQ dip of 233bps QoQ. Impact of wage hikes and visa expenses, apart from rupee appreciation was the major drag for profitability. Consequently, PAT came in at INR 5,940 V/s INR 6,275cr expected, de-growth of 10.1% QoQ.

In terms of order inflows, clients of $100M+ were up by 1, $50M+ were up by 1, $10M+ were up by 12. On operational front the LTM attrition at 11.6% in IT Services. We maintain our ACCUMULATE rating on the stock with a target price of INR 2,651."

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2444.05 as compared to the previous close of Rs. 2439.1. The total number of shares traded during the day was 68457 in over 3777 trades.

The stock hit an intraday high of Rs. 2471 and intraday low of 2427.1. The net turnover during the day was Rs. 167519483.

Source : Equity Bulls

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