Hold TCS; target Rs 1560: ICICIdirect.com

ICICIdirect.com's report on Tata Consultancy Services (TCS)

"TCS, Q1FY14 earnings were ahead of our and consensus estimates. Dollar revenues grew 4.1 percent QoQ (4 percent estimate) led by volumes (up 6.1 percent) while realisation declined ~1.6 percent. Constant currency revenues grew 4.8 percent while rupee revenues grew 9.5 percent, ahead of our 7.4 percent estimate. Revenue growth was led by IT services (up 10.7 percent QoQ) while equipment and licenses sales cooled off (down 25 percent QoQ) post 44 percent rise in Q4FY13. Gross margins declined 45 bps as wage hikes led to ~10 percent rise in cost of revenues. EBIT margins increased 51 bps QoQ ahead of our 21 bps decline and 26.3 percent estimate. Net income was higher (Rs 3,796 crore vs. Rs 3,755 crore estimate) led by revenue, EBIT margin beat. Hold the stock with a target price of Rs 1560," says ICICIdirect.com 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.

Read More