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Tata Consultancy Services Ltd Research Report - 27th Apr 2016

IT | Published on Apr 27th 2016

IT

For 4QFY2016, TCS posted revenue of US$4,207mn (V/s US$4,215mn expected), up 1.5% qoq. The growth was mostly volume led, which grew by 3.2% qoq. In constant currency (CC) terms, the company posted a qoq revenue growth of 2.1%. In rupee terms, revenues grew by 4.0% qoq to Rs28,448cr (V/s Rs28,454cr expected), led by rupee depreciation. The EBIT margin for the quarter came in at 26.1% V/s 26.7% expected. PAT came in at Rs6,341cr (V/s Rs6,201cr expected), up 3.8% qoq. The company expects a stronger FY2017 for which it has guided at an EBIT margin of 26-28%. We maintain our Buy on the stock with a target price of Rs3,004. Quarterly highlights: For 4QFY2016, the company posted revenue of US$4,207mn (V/s US$4,215mn expected), up 1.5% qoq. The growth was mostly volume led, which grew by 3.2% qoq. In constant currency (CC) terms, the company posted a qoq revenue growth of 2.1%. In terms of geography, the company posted a CC growth of 2.4% in USA, 1.8% in Latin America, 3.6% in continental Europe, 2.2% in India, 1.1% in Asia Pacific and 9.5% in MEA while UK posted a dip of 0.4%. The EBIT margin for the quarter came in at 26.1% V/s 26.7% expected. PAT came in at Rs6,341cr (V/s Rs6,201cr expected), up 3.8% qoq. Outlook and valuation: TCS highlighted that it had not received any negative indications on IT budgets/spending trends and expects FY2017 to be better than FY2016. Over FY2016-18E, we expect TCS to post a revenue CAGR of 13.0% in USD as well as INR terms.

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CMP 2,488
Target Price 3,004
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)438,203.47
MCAP NSE (Rs in Cr)437,799.53
P/E (x)17.29
EPS (Rs.)128.66
BV (Rs.)351.48
Div Yield (%)1.96
FV (Rs.)1.00
P/BV (x)5.74
EV/Sales (x)3.98
EV/EBITDA (x)14.13

Shareholding Pattern (%)

Promoter73.0
Foreign17.0
Institution5.0
Public & Others5.0
Corporate0.0
Grand Total100.0

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