22 October 2010

Emkay on TCS: All guns blazing raise TP further to Rs 1075

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Tata Consultancy Services
All guns blazing raise TP further to Rs 1075


ACCUMULATE

CMP: Rs984                                        Target Price: Rs1,075

n     Revenues at US$ 2,004 mn (+11.7% QoQ, +30.3% YoY) beat estimates significantly , propelled by ~10.4% QoQ growth in Int business and ~26% QoQ growth in India business
n     Incredible mgn performance yet again with margins improving further by ~70 bps QoQ to 30%, highest ever. Non manpower expenses % is now the lowest ever in co’s history 
n     Broad based growth across service lines/vertical wise. Europe/UK grow by ~14%/13%. Nearly all verticals record a double digit QoQ increase for the 1st time ever
n     Despite higher currency reset, up FY11/12E EPS by 2%/7% to Rs 42.4/47.5 as we build in rev gwth at 28%/21% for FY11/12(V/s 22%/19% earlier).ACCUM, revise TP of Rs 1,075

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