Tata Consultancy Services Ltd. share price target

11 October 2018 In line with its recent commentary, TCS managed to return to double-digit YoY CC revenue growth (+11.5% YoY; thanks to currency benefit of 120bp. PAT grew 22.6% YoY to INR79b (our TCS won deals with total contract value (TCV) of USD4.9b the same as last quarter. It expects to grow in double- digits for the remainder of the year, the ask-rate for which is not demanding. To grow 10% YoY CC in FY19, the CQGR required in 2H is 0.3%. To grow 10%+ YoY CC in each quarter, flat revenue in 3Q and 1.9% QoQ CC growth in 4Q should suffice. trade war and Brexit are potentially unnerving, TCS continues witnessing strong demand in the US, led mainly by BFSI and Retail. UK remains a complex geography, but is currently seeing demand in BFSI, Retail and even Manufacturing.

currency (CC) revenue growth of 3.7% q-o-q and 11.5% y-o-y. The return of double-digit y-o-y revenue growth trajectory after couple of years was supported by acceleration of revenue from digital business (60% y-o-y) and strong growth in BFSI (6.1% y-o-y) and retail and CPG (15.6% y-o-y). On a reported basis, revenue increased by 3.2% q-o-q to $5,215 million, above our...

recent sharp fall in rupee against USD would benefit TCS in terms of higher EBIT margin along with upside at PAT level, given its cash flow hedges policy, exposure to the U.S. (~53% of total revenue in Q1FY2019) and favourable onsite mix. Since the beginning of Q2FY2019, USD/INR rates have witnessed correction of close to 5.7% and are currently hovering...

Revenue grew by 6.82% to Rs. 34261.0 Cr in Q1FY19 when compared to the previous quarter. Tata Consultancy Services Ltd Q1FY19 results Comment

TCS is one of India's largest and oldest IT companies. With a presence in 42 countries, TCS boasts a large and diversified client base.

Hence, we continue to maintain HOLD' rating on the stock with a revised TP of Rs. 2,011, valuing at 22x FY20E EPS. Revenue beat reflects superb execution capability TCS' Q1FY19 performance was ahead of our expectation with strong revenue growth of 6.8% QoQ on consolidated basis (CC revenue growth of 4.1%) led by broad based growth across verticals, continued strong growth in UK (8.2% QoQ in CC terms) & continental Europe (5.3%) and recovery in the US BFS space. USD revenue however grew at a meagre pace of 1.6% QoQ weighed down by cross currency headwinds (impact of 250bps QoQ)....

Upgrade to BUY (Neutral earlier) with TP of Rs 2,130, 24x FY20E (20% premium to its 5-yr avg. valuations), supported by ~4.5% FCF yield and >60% RoIC. Our optimism has admittedly trailed TCS recent performance. Our (belated) upgrade derives from confidence on TCS growth trajectory, supported by (1) Scale and growth dominance of Digital business (25% of rev and 45.5% YoY), (2) Growth visibility (deal wins), (3) Strong recovery and outlook in BFSI vertical (across geos) and NorthAm geography and (4) Continuity in efficient capital allocation (80 to 100% of FCF as payout). 1QFY19 was inspiring (CC rev +4.1% QoQ) with revival in TCS core vertical (BFSI) and geography (NorthAm).

Revenue, TCV, Margins All Impress, BUY stays TCS reported an excellent 1QFY19, with revenue, EBIT margin and net profit all coming in above our estimates. Revenue in CC terms rose by a strong 4.1% QoQ (our estimate 3.2%), while in USD terms, revenue rose 1.6%. The adverse cross currency impact of 250bps was higher than our expectations (132bps). On the margin front, a positive surprise was seen, with EBIT margin down just 36bps QoQ (103bps above our estimate), aided by currency and operational efficiency....

TCS's Q1FY19 result was a beat to our forecast across most of the parameters. Digital business (25% of revenue) continued to fire with a 9%/45% QoQ/YoY growth in CC. Also, TCS confirmed that BFSI vertical (31% of revenue) is back on the growth path with...

Constant currency (cc) revenues grew 4.1% QoQ above our estimate of 3.5% QoQ. US$ revenues grew 1.6% QoQ to US$5,051 million, below our 2.5% QoQ growth and US$5,095.2 million estimate on account of higher than expected cross currency headwind of 250 bps Rupee revenues grew 6.8% QoQ to | 34,261 crore, above our 6.4% growth expectations of | 34,142.9 crore estimate At 25%, EBIT margins declined 40 bps QoQ and were above our 80 bps decline and 24.6% estimate....