Tata Consultancy Services Ltd. share price target

TCS posted lower revenue than expected while profitability stood in-line. Digital contributed ~40% incremental growth in 2Q growing at 10.7% cc terms while legacy grew 2%. While 2H seasonality will continue, we remain constructive based on 1) strong addition in large client bucket, 2) steady margin, 3) healthy deal pipeline and robust order book position, 4) continued traction in digital services & platform....

Buy on dips to Rs 2159 to Rs 2230 band for Target of Rs 2480

TCS revenue growth in 1QFY16 came in at 3.5% QoQ, led by SMAC, while volume growth was 4.8%. Pricing declined a bit (-1.3% QoQ). Revenue was in-line, while the 52 bps EBIT margin beat was led by growth leverage, rupee depreciation and higher utilisation.

utilities up 6.1%, and transportation (up 6.5%). The marginal miss on revenue was largely due to weakness in manufacturing (up 0.4%). Among geographies, America and UK grew 4.3%and4.8%qoqrespectively.LatinAmericawasweak(down6.4%)andJapanimpacted...

Background: Started in 1968, TCS pioneered IT services exports & is India's largest exporter (FY14 rev: INR 818bn, 300,464 people). Revenue Split: North America 55.3%, Europe - 28.7%, ROW - 15.9%. Services Mix: ADM - 41.6%, Enterprise Soln - 15.5%, Assurance Services - 8.4%, Engg, Indl - 4.7%, Infra Services - 11.9%, Global Consulting - 3.4%, Asset Lev Solns - 2.5%, BPO - 12%. Verticals mix: BFSI -42.9%, Telecom - 9.5%, Retail - 13.8%, Manufacturing - 8.5%, Hi-Tech-5.4%, Life Sciences - 5.8%, Travel - 3.4%, Energy - 3.8%, Media-2.3% Others - 4.6%. USD 100mn+ clients: 24.Fixed Price Contracts accounts for 48%. Utilisation (ex.trainees)...

Investors can buy the stock on dips to Rs. 2266-2337 over the next quarter

USD revenues at $3.90bn declined by 0.8% QoQ lower than street expectation of 0.8% QoQgrowth.Therevenuegrowthinconstantcurrencytermswas1.6%implyingacross currency impact of 240bps. INR revenues at Rs242bn declined 1.1% QoQ. Volumes and...

TCS' 4QFY15 revenue stood at US$3,900mn, which was down 0.8% QoQ and up 1.6% QoQ in constant currency (CC) terms. Reported USD revenue was 1.3% below our estimate. Adjusted EBIT margin was ahead of estimates, led by operational efficiency, with higher other income driving adjusted net profit up 8.5% QoQ.

Background: Started in 1968, TCS pioneered IT services exports & is India's largest exporter (FY14 rev: INR 818bn, 300,464 people). Revenue Split: North America 55.3%, Europe - 28.7%, ROW - 15.9%. Services Mix: ADM - 41.6%, Enterprise Soln - 15.5%, Assurance Services - 8.4%, Engg, Indl - 4.7%, Infra Services - 11.9%, Global Consulting - 3.4%, Asset Lev Solns - 2.5%, BPO - 12%. Verticals mix: BFSI -42.9%, Telecom - 9.5%, Retail - 13.8%, Manufacturing - 8.5%, Hi-Tech-5.4%, Life Sciences - 5.8%, Travel - 3.4%, Energy - 3.8%, Media-2.3% Others - 4.6%. USD 100mn+ clients: 24.Fixed Price Contracts accounts for 48%. Utilisation (ex.trainees)...

TCS in its pre-quarterly analyst meet on Thursday has said 4QFY15 USD revenue growth is likely to get adversely impacted by 200bps owing to adverse cross-currency movements and USD appreciation against the EUR, GBP and AUD, while INR appreciation is likely to have an even bigger impact of 275bps on CC revenue growth. IT budgets thus far have seen a slow start to CY15.