Tata Consultancy Services Ltd. share price target

We attended the Analyst day at TCS, and came back impressed with the company's investments on the Digital front, with capabilities demonstrated aptly through its use cases in key verticals like:[1] BFSI (frictionless payments,...

TCS posted a lower than expected top-line for 3QFY2016, while the EBDITA and net profit were in line and higher than expected, respectively. The company posted a 0.3% sequential de-growth in USD revenues to US$4,145mn (V/s our expectation of US$4,177mn). In constant currency terms (CC), the company posted a qoq revenue growth of 0.5%, mainly impacted by the Indian business. The international business posted a 1.1% qoq growth during the quarter. On the operating front, the EBIT margin came in at 26.6% (V/s 26.4% expected) a downtick of 47bp qoq. Consequently, the PAT came in at Rs6,110cr (V/s Rs5,999cr expected), a growth of 0.9% qoq. While we have downgraded the numbers, we maintain our Buy on the stock with a target price of Rs2,854. Quarterly highlights: TCS posted a 0.3% sequential de-growth in USD revenues to US$4,145mn (V/s an expectation of US$4,177mn). In CC terms, the company posted a qoq growth of 0.5%, mainly impacted by the Indian business. The volume growth during the quarter was of 0.4% qoq. On the operating front, the EBIT margin came in at 26.6% (V/s 26.4% expected) a downtick of 47bp qoq. Consequently, the PAT came in at Rs6,110cr (V/s Rs5,999cr expected), a growth...

For the sixth successive quarter, TCS?s USD revenue missed expectations (QoQ decline of 0.3%, vs est 0.5%). In CC terms, it was 0.5% (est 1.1%). YoY USD growth eased for the 5th successive quarter. TCS?s 3QFY16 revenue decline appears disappointing even adjusting for the expected impact of the Chennai floods. Traction was seen in verticals comprising just ~20% of revenue.

TCS continued its dismal performance with 0.3% QoQ de-growth in USD revenues at $4,145mn, below our as well as consensus estimates. This is the weakest-ever QoQ USD revenue growth in Q3 of any year.

Outlook and valuation: This is the fifth consecutive quarter in which TCS has missed expectations.Weseetheseassignsofthelargebaseandhighexpectationscatchingup.For TCS to grow in double digits on its current base, it will have to add US$ 1.6bn revenues...

Background: TCS pioneered IT services exports & is India's largest IT services exporter. In 3QFY16; Geography Split: North America: 55.6%, Europe: 27.0%, India: 6% and ROW: 12.0%. Revenue Mix: ADM: 39.7%, Enterprise Solutions: 17.40%, Assurance Services: 8.6%, Engineering & Industrial: 4.5%, Infra Services: 15.2%, Asset Leverage Solutions: 2.8%, BPO: 11.8%. Verticals mix: BFSI: 40.5%, Telecom: 8.4%, Retail: 13.8%,...

TCS' revenue came lower in 3Q, impacted by decline in India-business, Diligenta, energy vertical and volatility in Japan portfolio. With healthy client metrics, stable operating profile, strength in select services & verticals (infra/conti-Europe) and reasonable margin of safety, we maintain BUY on TCS with Target Price of Rs2,795,...

TCS reported 3.0% QoQ growth in USD revenues at $4,156mn, below our as well as consensus estimates. CC revenue growth came in at +3.9% QoQ led by strong volume growth of 4.9% while change in business mix and higher number of working days resulted in negative impact of 1.0% QoQ on price realization. EBITDA margin improved 78bps QoQ to 28.8% largely due to the INR depreciation. We resume coverage on the stock with Hold rating with our Target Price at Rs 2,815 (20xFY17E earnings).

order booking (30% higher than the last high). The demand environment looks strong in manufacturingandretail,andBFSappearslikelytogrowinlinewiththecompany'saverage. Geographically, the management expects the US to accelerate; Europe remains strong....