TCS 5 star rate

Tata Consultancy Services Ltd

INR 869.25  16.2 (1.9%)

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SECTORINDUSTRY
PrimaryInformation TechnologyInformation Technology

SNAPSHOT

  • BSE Code / NSE Ticker
  • 532540 / TCS  
  • Last traded time
  • 2010-09-07 16:00:00  
  • Last traded on
  • BSE  
  • Intra-day Low / High
  • 855.5 / 874.3
  • 52w closing Low / High
  • 550.3 / 878.3
  • Today Volume
  • 1,465,680
  • 30d avg Daily Volume
  • 1,424,683
  • Market Cap
  • INR 166,968.7 cr
  • P/E Ratio TTM
  • 28.30
  • Historical Performance
  • Today
  • Weekly
  • Monthly
  • 3 Months
  • 1 Year
  • 1.9%
  • 3.0%
  • 0.4%
  • 20.0%
  • 64.9%

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Comment		Research House Call Date Order DESC Call Action Target / Stop-loss Call Market Price Current Stock Price
 Karvy Stock Broking 2010-07-22 Neutral 910 / -- 842.55 869.25

TCS a market market performer; target Rs 910

At Rs 841, Tata Consultancy Services stock trades at 18.5x FY12E EPS. Owing to the run up in the stock price post its 1QFY11 results, we downgrade the stock to market performer from out performer and maintain our target price of Rs 910, implying a P/E of 22x FY12E EPS

 Karvy Stock Broking 2010-07-16 Buy 910 / -- 832.40 869.25

TCS an outperformer; tgt of Rs 910

Tata Consultancy Services (TCS) 1QFY11 top-line grew 6.2% qoq to Rs 82.2 bn (USD 1,794 million, 6.4% qoq), led by strong 8.1% qoq volume growth even as currency movements, lower pricing and an offshore shift adversely impacted revenues. In constant currency, revenues grew 7.3% qoq. TCS recorded growth across verticals, with telecom (10.6% qoq), hi-tech (11%), energy & utilities (16.8%) and media & entertainment (12.1%) standing out, even as BFSI grew 4.1% qoq (6.5% qoq in constant currency).Impressive volume growth, the fact that growth was broad-based across verticals and margin resilience in the face of wage and currency headwinds were the key positives for TCS in 1QFY11. We upgrade our EPS estimates for FY11 and FY12 by 3% and 4%, respectively and maintain an outperformer rating on the stock with a revised target price of Rs 910 (Rs 880 earlier)

 Motilal Oswal 2010-07-15 Neutral 845 / -- 784.10 869.25

Neutral on TCS

Tata Consultancy Services (TCS) 1QFY11 operating performance was ahead of expectations. TCS outperformed Infosys on US dollar revenue growth (6.4% v/s 4.8% QoQ and estimate of 4.7% QoQ), showed lower EBITDA margin declines of 70bp (v/s 230bp QoQ and estimate of 130bp decline) due to higher-than-expected reversal of bad debt provisions. PAT was in line with expectations (Rs 18.4billion v/s Rs 18.5 billion), on higher than expected taxes (effective tax rate of 19.1% v/s estimate of 15.5%). We have revised our estimates upwards by 3.3% in FY11 (EPS Rs 40.8) and 4.5% in FY12 (EPS Rs 44.5) due to better-than-expected volume growth, and [2] higher margin expectations. Maintain neutral, with a target price of Rs 845, based on 19x FY12E

 Prabhudas Liladhar 2010-07-15 Buy 990 / -- 784.10 869.25

Buy TCS; tgt Rs 990

Tata Consultancy Services (TCS) reported strongest quarter in the last 2.5 years, ahead of our and street estimates. We reiterate our buy rating on TCS, with a target price of Rs 990. We believe that the volume momentum would continue, although currency and wage inflation would weigh down on the margin. We are confident of the company delivering operating margin in narrow range after a dip in the Q1FY11 due to salary hike. We believe that realization improvement would help company deliver positive surprise on margin, says Prabhudas Lilladher research report.

 Reliance Money 2009-10-21 Hold 700 / -- 633.45 869.25

Hold TCS, target of Rs 700

In the last six months most of the IT stocks has outperformed the major market indices with huge margins, reflecting the renewed investors focus the sectors. TCS being the mammoth Indian IT sector, sharply run up by 121% in the last six months. Going forward, we expect quarterly upgrade cycle to continue in FY11, however strengthening rupee likely to play spoilsport. Nevertheless, as industry environment is on an uptrend coupled with companys core business operation likely to remain strong with strong volume growth and pricing improvement, we expect TCS to remain a market performer in the next 12-months, however in the near term we expect some sideways movement with negative bias. We maintain 'HOLD' on TCS with upward revised target price of Rs 700, at our target price stock will be valued at 22X FY10E and 19x FY11E.

 Motilal Oswal 2009-10-20 Buy 684 / -- 621.40 869.25

Buy TCS, target of Rs 684

We have upgraded our FY10 EPS estimates by 3.8% to Rs 32.9 v/s Rs 31.7 earlier and by 4.7% in FY11 to an EPS of Rs 36 against Rs34.4 earlier due to [1] better-than-expected volume growth and higher growth visibility, [2] better-than-expected margin progression and operational improvement, [3] higher-than-expected PAT in 2QFY10, [4] lower taxation at 15% in FY10 against an earlier estimate of 17% for 2HFY10. We have reset our exchange rate assumptions from Rs 48/USD for 2HFY10 to Rs 47/USD, while keeping FY11 assumptions intact at Rs47/USD. Our revised FY11 EPS stands at Rs 36 (v/s Rs 34.4 earlier). The stock trades at a P/E of 18.9x FY10E and 17.2x FY11E earnings, a discount of 15% to Infosys. We reiterate TCS as our top pick in large-cap IT stocks. We maintain 'Buy' raising our target price to Rs 684 based on 19x FY11E).

 Angel Broking 2009-10-17 Buy 708 / -- 621.40 869.25

Buy TCS, target of Rs 708

During 2QFY2010, TCS recorded a Top-line growth of 3.2% qoq, mainly attributable to a 5% qoq growth in volumes and a 0.9% qoq growth due to favorable cross-currency movements witnessed over the quarter in US Dollar terms. The average realised Rupee/US Dollar rate during 2QFY2010 was lower by 0.7% qoq at Rs48.34, as the Rupee continued to appreciate vis--vis the US Dollar. On the back of higher volume growth and strong margin improvement, TCS recorded an impressive 6.8% qoq increase in its 2QFY2010 Bottom-line. On a yoy basis, TCSs Bottom-line grew by a strong 28.7%. TCS added 30 new clients during 2QFY2010, of which 11 new client wins were for its Banking product, TCS BaNCS. During the quarter, TCS added a gross of 5,530 employees and a net of 320 employees, taking the total headcount (including subsidiaries) to 1,41,962 employees. At the CMP, the stock is trading at 17.2x its FY2011E EPS. We thus upgrade the stock to a Buy, with a target price of Rs 708, implying a P/E ratio of 20x the FY2011E EPS.

 Sharekhan 2009-10-16 Buy -- / -- 599.00 869.25

Buy Tata Consultancy Services

Tata Consultancy Services (TCS) has reported stellar performance yet again in Q2FY2010. Despite higher foreign exchange (forex) losses, TCS Q2FY2010 results were ahead of our and street's expectations led by strong operating performance. The consolidated revenues grew by 3.2% sequentially to Rs7,435 crore. In the dollar terms, the revenues grew by 3.9% sequentially to US$1,538 million during the quarter driven by volume growth (4.97%; ahead of our expectation) and cross-currency benefits (0.72%). The unrecognised forex losses sitting on the balance sheet declined further to Rs 314 crore in Q2FY2010 from Rs 430 crore reported in the last quarter. At the current market price, the stock is trading at 19.8x FY2010 earning estimates and 17.8x FY2011 earnings estimates. We will review our earnings estimates and price target in a detailed note. We maintain our 'Buy' recommendation on the stock.

 Motilal Oswal 2009-09-08 Buy 614 / -- 553.80 869.25

Buy TCS, target of Rs 614

1QFY10 outperformance has reduced concerns on growth and margin outlook. With better margin performance, higher earnings CAGR at 13.9% against 4.9% for Infosys and stability in BFSI, its 17% valuation discount to Infosys, should narrow. We upgrade the stock to Buy with a target price of Rs 614 based on 18x FY11E.

 Reliance Money 2009-07-21 Hold 560 / -- 477.40 869.25

Hold TCS, target of Rs 560

TCS reported a commendable performance for Q1FY10, beating street estimates with a huge margin. Incidentally, this is by far the best quarterly growth in terms of net profit TCS has achieved in its listing history. For Q1FY10, revenues in USD terms are up by 3.5% qoq to USD 1480.5 million, with 3.5% blended volume growth and marginal 25bps decline in pricing. During this quarter, TCS has added around 26 new clients and closed 8 large deals. For FY10E, TCSs campus offers stood at 24885, which are going to join from Q2FY10E onwards. We upgrade our rating from 'Reduce' to 'HOLD' on TCS with upward revised target price of Rs 560, at our target price stock will be valued at 18X FY10E and 16x FY11E.

 Angel Broking 2009-07-17 Buy 523 / -- 433.60 869.25

Buy TCS, target of Rs 523

We expect TCS to record a 7.3% CAGR in Top-line, while Bottom-line is expected to clock an 11.2% CAGR over FY2009-11E. Subsequent to the out-performance vis--vis our estimates this quarter, we have raised our EPS forecasts for TCS for FY2010E and FY2011E by 11% and 16%, respectively. At the CMP, the stock is trading at 13.3x FY2011E EPS. We believe the worst is over as far as the global economic slowdown is concerned. The results of Infosys and TCS announced so far bear evidence of this, particularly TCS, which has shown admirable resilience amidst a difficult operating environment.Going ahead, with the global economy expected to recover and the environment expected to improve in 2HFY2010 and particularly FY2011, we believe the Indian IT Sector is likely to benefit significantly and offshoring will remain a mega trend. TCS, being the largest Indian IT company with a solid execution track record is expected to be a key beneficiary among the Indian IT pack. We thus upgrade the stock to a Buy with a Target Price of Rs 523, implying a P/E ratio of 16x FY2011E EPS (14x earlier).

 Prabhudas Liladhar 2009-07-17 Accumulate 500 / -- 433.60 869.25

Accumulate TCS, target of Rs 500

Tata Consultancy Services (TCS) declared surprisingly strong results in Q1FY10. Revenue grew by 0.5% QoQ (v/s an expected decline of 1.8%) and PAT grew by 15.7% QoQ (v/s an expected decline of 4.0%). Despite the uncertain outlook, we believe that TCS stock is attractive as valuations are yet to reflect the companys better-than-peer performance. At 15.0x FY10E and 13.0x FY11E earnings, TCS valuation gap to Infosys is high given its better earnings performance. We upgrade the rating to Accumulate, with a price target of Rs 500.

 Sharekhan 2009-07-17 Buy -- / -- 433.60 869.25

Buy Tata Consultancy Services

Tata Consultancy Services (TCS) consolidated revenues grew by 0.5% sequentially to Rs 7,207 crore in Q1FY2010, which is above our expectations. The revenue growth was driven by volume growth (3.54%, ahead of our expectations). This was partially offset by unfavorable currency movement (-0.25%), pricing (-0.56%) and higher proportion of offshore revenues (-0.56%). We will come out with a detailed note to review our earning estimates to incorporate Q1FY2010 performance. At the current market price, the stock is trading at 16.6x FY2010 earnings estimate and 15.7x FY2011 earnings estimate. We maintain our 'Buy' recommendation on the stock.

 Motilal Oswal 2009-06-02 Neutral -- / -- 694.35 869.25

Motilal Oswal neutral on TCS

CS' management is seeing demand stabilizing post the uncertain environment in 4QFY09. However, demand stability may not signal significant volume up-tick in the near future owing to possible leakages in existing business. Project cancellations, which were the bane for 4QFY09 volumes, have not been witnessed in 1QFY10 thus far. Given its high concentration in BFSI and manufacturing, we expect TCS to post sluggish growth in FY10. We expect margin pressure due to rupee appreciation, sluggish volumes and impending staff addition in 2HFY10. While the absence of project cancellations and growth in retail are positives, verticals which contribute 80% of TCS revenues continue to be sluggish. We would be watching for signs of rebound in these verticals. We expect the company to report USD revenue de-growth of 4.5% in FY10 (including TCS e-Serve) and an EPS of Rs 50.2. The stock trades at 13.8x FY10E EPS and 13.7x FY11E EPS. Maintain Neutral.

 Angel Broking 2009-05-13 Buy 726 / -- 622.45 869.25

Buy TCS, target of Rs 726

Post 4QFY2009 results, TCS' stock has risen 10% as compared with 24% for Wipro. Wipro now trades at 13.8x FY2010E EPS. Infosys on the other hand, trades at 15.5x FY2010E EPS while TCS trades at 12x FY2010E EPS, a significant 23% discount to Infosys and a 13% discount to Wipro. We upgrade TCS to Buy from Neutral with a target price of Rs 726, assigning a target P/E of 14x FY2010E EPS.

 Reliance Money 2009-04-22 Sell 474 / -- 542.95 869.25

Sell TCS, target of Rs 474

TCS reported disappointing numbers for Q4FY09, with revenues in USD term declined by 3.4% qoq to USD 1433 million (against our estimates of 0.2% qoq growth). Excluding CGSL revenues of USD 1.2 million, organic revenues declined by 8.2% qoq. Blended volume declined by 2.6% and pricing dropped by 2% qoq, consolidated revenues in INR term declined by 1.4% to Rs 71718 million. EBIT margins dropped by 105bps qoq, which was better than our expectations. Net profit for the quarter fall by 2.8% qoq to Rs 13143 million. During the quarter, TCS has added around 36 new clients and closed 7 large deals. For FY10E, TCSs campus offers stood at 24000, which management indicated at taking a just in time approach after the Q1FY10E results. We continue to remain negative on sector and maintain SELL with a 12M target price of Rs 474, at our target price stock will be valued at 9X FY10E and 8x FY11E.

 Prabhudas Liladhar 2009-04-21 Reduce 529 / -- 551.70 869.25

Reduce TCS, target of Rs 529

We expect TCS revenue and earnings to grow at a CAGR of just 6.1% and 3.5%, respectively over FY09-11. The board has declared a 1:1 bonus, but we dont believe this will impress investors who are more likely to be concerned about the weak earnings growth in the future. With no signs of recovery in the near future and weak earnings in CAGR over the next two years, we downgrade the stock to Reduce at the target price of Rs 529.

 Motilal Oswal 2009-03-12 Buy 550 / -- 477.40 869.25

Buy TCS, target of Rs 550

We have revised our estimates to factor in project cancellations, adverse cross currency impact and revised INR/USD assumptions. Our INR/USD assumptions for FY10 have changed from Rs 45.6 to Rs 49.6. We model 3% volume growth and 6% pricing decline for TCS in FY10. USD revenues including CGSL are expected to rise 0.7% in FY10 (down 2.4% ex-CGSL). We cut our FY10 EPS by 6.3% to Rs 52.9 (from Rs 56.5 earlier). Stock trades at 9x FY10E earnings. Maintain 'Buy' with a target price of Rs 550 (upside of 16%).

 Reliance Money 2009-03-06 Sell 440 / -- 481.70 869.25

Sell TCS, target of Rs 440

The management continues to remain cautious on the industry environment and expects the pain to continue in CY2009, however remain optimistic about revival by Q2FY10E. The management indicated at margins to be resilient to the extent of single digit pricing cut and continues to exercise internal levers to the optimal levels. On the other hand, project cancellations intensified in the recent months and its ripple effect will be seen in TCS deferring the campus joinees date to late 2009 and reducing the bench strength to non-existent levels. We continue to remain negative on the sector and maintain 'SELL' rating on the TCS with a target price of Rs 440.

 Reliance Money 2009-01-19 Sell 440 / -- 500.75 869.25

Sell TCS, target of Rs 440

CS performance for Q3FY09 was disappointing with a 5.8% sequential decline in USD revenues to USD 1483 million. Net profit for the quarter up by 7.2% qoq to Rs 13523 million. On the back of weak industry environment and further pricing pressure indicated by TCS management, we have reduced our estimates for FY09E and FY10E (EPS of Rs 55.1 and Rs 58.1 against Rs 56.1 and Rs 61.7 earlier respectively) We maintain SELL on TCS with a 12 month target price of Rs 440, at our target price stock will be valued at 8X FY10E.

 Sharekhan 2009-01-19 Hold -- / -- 500.75 869.25

Hold Tata Consultancy Services

The consolidated revenues in rupee terms grew by 4.7% quarter on quarter (qoq) to Rs 7,277 crore driven by a favourable exchange rate (contributing 3.4% to the top line growth). We downgrade the stock to Hold and keep our price target under review.

 ICICIDirect.com 2009-01-16 Hold 552 / -- 503.00 869.25

Hold TCS, target of Rs 552

The company reported a topline growth of 4.65% QoQ at Rs 7277 crore (1.23% in constant currency term). Net profit at Rs 1352 crore grew 7.2% QoQ (Idirect estimate Rs 1281 crore), driven by sequential expansion in margin of 58 bps. The company has maintained its gross hiring target for FY09 (30000-35000). TCS has already made gross hiring of over 30000 in the last three quarters. Hence, we expect muted volume growth in the last quarter of FY09. The profitability of the company for FY09 has got hammered primarily because of large hedging losses. The management indication towards pricing pressure and project delays and cancellations points towards a more challenging environment, going ahead. Though the deal pipeline looks robust, slow ramp ups by the client will result in muted volumes even in FY10. We value the company using the DCF methodology, which gives us a price target of Rs 552.

 Angel Broking 2009-01-15 Accumulate 578 / -- 510.45 869.25

Accumulate TCS, target of Rs 578

TCS recorded a 4.7% qoq growth in Top-line in 3QFY2009. Owing to the Margin expansion, TCS recorded a 7.2% qoq rise in Bottom-line in 3QFY2009. Over FY2008-10E, we expect TCS to record a 15.4% CAGR in Top-line, while Bottom-line is expected to clock a mere 6.2% CAGR. While valuations appear reasonable, given the cautious short-term environment for growth and pricing and the below-par 3QFY2009 performance by TCS, we believe the stock is likely to trade lacklustre in the near-term. We have downgraded the Target P/E multiple to 10x (13x earlier). We recommend an Accumulate on the stock, with a Target Price of Rs 578. However, near-term stock performance is likely to remain muted.

 Motilal Oswal 2009-01-15 Buy 584 / -- 510.45 869.25

Buy TCS, target of Rs 584

3QFY09 USD revenues declined 5.8% QoQ to USD 1,483 million. PAT at Rs 13.5 billion grew 7.2% QoQ. In 3Q, both TCS and Infosys have grown 1% QoQ (in constant currency). Although TCS realization has been flat QoQ, we believe accommodative billing rates are close to reality and pricing will be key going forward. We have marginally reduced our FY10 EPS to Rs 56.2 (from Rs 57 earlier), while keeping our FY09 assumptions largely unchanged, in order to factor in likely strained margins resulting from rising pricing concerns. We expect FY10 USD consolidated revenue to grow at 7.4% for TCS (4% excl. CGSL). The stock is trading at 9.1x FY10E earnings. We value TCS at 10.4x FY10 EPS (a 20% discount to the P/E multiple implied by Infosys target price). Maintain Buy with a target price of Rs 584.

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