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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