Accumulate TCS; target of Rs 1465: Dolat Capital

“TCS’s delivered strong numbers with a topline growth of 12% led by 5.3% volume growth and favourable Fx movement by 813bps. Operating profits grew by 11% QoQ as Fx tailwinds helped negate impact of wage hike/visa/pricing cut of 100bps during the quarter. PAT grew by 12% QoQ at ` 33bn well ahead of our estimate of ` 30bn on account of Fx gains and sustained efficiency in delivery.”

“TCS managed broad-based growth in constant currency terms across geographies/service lines/vertical lines, except for the business in India (down 14% QoQ). It is seeing strong momentum in next gen technologies such as Bigdata, Mobility and Analytics currently working on over 100+ clients for Mobility business. The company is also witnessing strong traction in host of its platform businesses SMB ion, HRO, F&A, Analytics and Life & Pension (expect sales of USD 500mn in FY13). The Company is confident on delivering 14%+ growth (NASSCOM estimates) but remains cautious as environment is not very conducive in European market. However; the current pipeline gives enough confidence to maintain sustained growth performance.”

“The company is witnessing higher demand for its service delivery model and better/ faster closure versus the previous quarter. Thus; we have turned incrementally positive on TCS in view of its strong business growth outlook based on robust growth expectancy for outsourcing and quicker decision making & rampups among its client portfolio. We maintain TCS as our Top Pick among Tier I IT space with a Target price of INR 1465 valued at 19x of its FY14E earnings (20% premium to Infy target multiple of 15x),” says Dolat Capital research report.  

Public holding more than 90% in Indian cos

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