Jan 17, 2013, 03.31 PM | Source: Moneycontrol.com
Way2Wealth has recommended hold rating on Tata Consultancy Services (TCS) with a target of Rs 1370 in its January 17, 2013 research report.
, Way2Wealth |
“TCS again reported good growth momentum in a seasonally tough quarter. Revenues for the quarter stood at $2,948mn, and registered QoQ growth of 3.3%. Volume growth of 1.3% was below than overall market expectation and TCS standards and mainly impacted by weak seasonality and longer than expected furloughs in hi tech/manufacturing/BFSI verticals. Growth was supported by 1.3% QoQ improvement in blended realizations, because of change in portfolio mix.”
“Margin improvement in a quarter of lower volume growth, positively surprised us. EBIT margin expanded by 50bps sequentially to 27.26% mainly due to productivity improvement and SG&A cost optimization. But, lower other income and higher provision for taxes negated the operating margin expansion and led to a net income margin of 22.1%, down 38 basis points quarter-onquarter. Going forward, management articulated confidence on full year EBIT margin guidance of 27%.”
“We believe, TCS would continue to grow better than its peers backed by its strong execution capability and ramp up of earlier deal winnings. But, at the current price of Rs 1347.75, the stock is trading at 17x of FY14E EPS of Rs 78.15 and there is little room available for upside. At the current price we feel the stock is fairly valued and not expecting any significant upside in near to medium term. One can hold the stock with a target of Rs 1370,” says Way2Wealth research report.
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