Moneycontrol
Apr 21, 2017 03:14 PM IST | Source: Moneycontrol.com

Hold Tata Consultancy Services; target of Rs 2346: Geojit Financial Services

Geojit Financial Services recommended hold rating on Tata Consultancy Services with a target price of Rs 2346 in its research report dated April 20, 2017.

Hold Tata Consultancy Services; target of Rs 2346: Geojit Financial Services

Geojit Financial Services' research report on Tata Consultancy Services


TCS’ Q4FY17 performance was slightly below our expectations with revenue declining by 0.3% QoQ despite volume growth of 1.7%, clearly indicating pricing pressure in the traditional verticals. Realisation during the quarter fell 0.7% QoQ in CC terms. Revenue was also impacted by adverse cross currency movement (1.3%). While revenue in dollar terms increased 1.5% QoQ, it rose 1% in constant currency.


Outlook


We have reduced our EBIT margin by 70bps for FY18E/19E to factor in higher investments by the company towards building digital capabilities and higher offshore hiring. As a result, we expect the net profit to grow at a moderate CAGR of 6.5% over FY17-19E. Thus, we have slightly toned down our PAT estimates for FY18E/FY19E by 2.8%/3.7%. Maintain HOLD with a revised TP of Rs 2,346 (earlier Rs 2,436) based on 15.5x FY19E P/E.


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