ICICI Direct has recommended hold rating on Tata Consultancy Services with a target price of Rs 2400 in its research report dated July 14, 2017.
ICICI Direct’s research report on Tata Consultancy Services
US$ revenues grew 3.1% QoQ to $4,591 million in line with our 3.3% QoQ growth and $4,599.2 million estimate. Constant currency revenues grew 2% QoQ led by volume growth (3.5% QoQ) Rupee revenues declined 0.2% QoQ to | 29,584 crore , in line with our flat growth estimate of | 29,646 crore At 23.4%, EBIT margins declined 230 bps and were below our 150 bps decline and 24.2% estimate mainly on account of wa ge hike and rupee appreciation PAT of | 5,945 crore was bel ow our | 6,068 crore estimate led by margin miss. TCS recommend ed an interim dividend of | 7 / share.
However, FY19 FCF yield of 5% and the management’s continuous commentary onmaintaining80% of FCF payout should restrict the downside. Hence, we maintain our HOLD rating on the stock with a target price of |2400.
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