Neutral: TCS
Motilal Oswal
10 January 2019 EBITDA increased 21.7% YoY (5% miss) and PAT grew 24.1% YoY (our the US, as evident from the 70bp QoQ uptick in subcontractor expenses. TCS cited that demand on the ground was very healthy and broad-based across regions and verticals. This was reflected in deals TCV of USD5.9b v/s USD5b in the previous two quarters, with healthy contribution from North America (USD3b+), BFSI (USD2b+) and Retail CPG (USD800m+). With respect to elevated onsite cost, TCS expects it to rationalize over a period of time via investments in training and also passing some of it to clients. The trend of supply shortage was called out by a few companies in 2QFY19 (INFO, MTCL and HEXW), which cited challenges in demand fulfilment at onsite. TCS 9MFY19 EBIT margin of 25.7% is after YoY INR depreciation of 8.4% for this period.
Tata Consultancy Services Ltd. is trading above it's 200 day SMA of 2020.04
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