Monday, October 19, 2009

[Investors Please Listen] TCS Q2FY10 Result Update ; Stellar show yet again ; ACCUMULATE ; Target : Rs 655

Tata Consultancy Services

 

Stellar show yet again


ACCUMULATE

 

CMP: Rs 608                          Target Price: Rs 655


TCS reported revenues of US$ 1,538 mn (+3.9% QoQ) ahead of estimates (Emkay est at US$ 1,517 mn).  Volume growth was ~5% QoQ with revenue performance exemplary yet again in the wake of significant onsite to offshore/GDC shift (onsite % of revenues declined by ~170bps QoQ to 42.7%, note that onsite % of revenues has reduced by ~1000 bps over the past 4 quarters)

Operating margins increased by ~150 bps sequentially to 28.7% (our estimates factored in ~10 bps expansion), and were the highest ever in the past 15 quarters

Profits at Rs 16.2 bn (+6.8% QoQ,+23.6% YoY) beat expectations driven by higher revenue/margin performance and lower taxes.

Up FY10/FY11 EPS estimates by ~5%/1.5% to Rs 32/Rs 35 respectively.

Expect continuation of TCS's relative out performance and narrowing of valuation discount to Infosys.

Maintain ACCUMULATE with a revised target price of Rs 655 ( V/s Rs 615 earlier)  


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The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
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