Accumulate TCS; target Rs 2300: P Lilladher
Brokerage house Prabhudas Lilladher is bullish on Tata Consultancy Services (TCS) and has recommended 'Accumulate' rating on the stock with a price target of Rs 2,300 in its research report dated October 15, 2013.
October 17, 2013 / 11:01 IST
Prabhudas Lilladher's report on Tata Consultancy Services (TCS)
"Tata Consultancy Services (TCS) reported Q2FY14 results in line with PLe/Consensus expectation. The moderation in performance (Organic: 4.2%) compared to Q1FY14 is in line with our expectation. Rich valuation leaves limited room for any moderation in growth performance for the company. Moreover, we believe, stretched levers leaves limited scope for accelerated growth. TCS’ performance has been steadier than any of its Tier-1 peers. However, in the current quarter, the organic growth of TCS decelerated compared to the previous quarter, a performance in contrast with Infosys wherein we witnessed accelerated performance. We believe a catch-up by Infosys would push an argument for narrowing premium.""TCS’ realization decline of 0.9% QoQ after a sharp dip in the previous quarter. The company reported QoQ realization dip in 7 of the last 10 quarters. According to the management, the decline in realization is largely due to geography, service, onsite-offshore and vertical mix change. The current valuation factors in strong performance by TCS. We expect revenue momentum to stay steady with negative bias to margin. We revise our target price at Rs 2,300, 20x FY15E earnings estimate," says Prabhudas Lilladher research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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