TCS figures positive surprise in revenue terms: Quant Cap

TCS earnings’ have been a positive surprise in revenue terms, says Basu Banerjee of Quant Capital.

Talking to CNBC-TV18, he says his profit after tax (PAT) estimate was Rs 3830 crore and the actual figure falls in line with that. The EBITDA figure is slightly better than estimates, as around Rs 5080 crore was expected, and it is at Rs 5144 crore. Below is the edited transcript of his interview with CNBC-TV18: Q: Do you have the dollar revenue as well as the margin picture? A: No. We have yet to get the dollar revenue. Our profit after tax (PAT) estimate was Rs 3830 crore and it is exactly the same. In terms of EBITDA, we were expecting around Rs 5080 crore and it is Rs 5144 crore which is slightly better than our estimate, and margins are also at 28.6. Broadly all in all, rupee revenue is around Rs 17900 crore against our estimate of around Rs 17500crore. We were factoring in at 3.4 percent revenue growth q-o-q, it is better than that. So, all in all, a positive surprise in revenue terms. As a wage hike was going to come into the picture, so it is slightly okay and the bottom-line is exactly matching with our estimates. But the stock is already at around Rs 1650, which is our price target. Going ahead, one should see the transition of a weaker rupee because we were earlier factoring in FY14 rupee-dollar at 54 which will be transitioning to 57.50. That will get compensated by the upcoming immigration bill. If one leaves aside the immigration bill, an upside is definitely there. But if one is factoring in immigration bill at Rs 1700 kind of levels, I don’t see much of upside to the stock. Unless and until, in the conference call the management guides for better-than-expected dollar revenue growth from the current levels of 16-17 percent in FY15. Q: How do you expect the stock to open in tomorrow’s trade and before we get clarity on the immigration bill? Because perhaps some clarity is expected by August. How do you expect the stock to react? A: If one leaves aside the immigration bill from current fundamentals and the commentary across the players like HCL, TCS, Mindtree along with the favourable rupee, the focus on productivity. All the stocks can see a decent upmove but any negative kind of development through the immigration bill will play a dampener. Leaving that aside, excellent set of numbers and we won’t be surprised with further upside as a precursor to Q2 numbers.