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B l o c k b u s t e r q u a r t e r …
Each quarter “Chandra – CEO of TCS” does and says what investors want
to hear. 7.5% US$ revenue growth was lead by strong volume growth of
7.4% and alleviates concerns of back-ended revenue growth in FY12.
Revenue growth was broad based with BFSI growing 5.8% QoQ,
manufacturing (8.9%), retail (11.3%) and telecom (14.3%). What is
encouraging is that the company signed 10 large deals (4-6 in North
America, 1 each in Europe and 2 in Emerging markets) and continues to
pursue 15 such additional deals which could help sustain growth
momentum. Notable concerns include utilisation excluding trainees
(83.2%) that continues to remain at elevated levels relative to the
management’s target of 82%-84%, soft pricing and new client additions,
and macro concerns which continue to be volatile. That said, we are
raising our FY12 revenue/EPS estimates to accommodate the Q1 beat but
maintain our FY13 EPS estimate and our |1320 price target.
ƒ Volume surge lead to comprehensive beat
TCS beat our and consensus estimates lead by a strong 7.4%
volume growth. Indian GAAP revenues grew 6.3% to |10,796 crore
vs. our/consensus estimate |10,686 crore/|10,691 crore while the
company earned |12.2 in diluted EPS ahead of our/consensus
estimate of |11.9/|11.6. Noticeably, EBITDA margins also were inline with our 28.2% estimate despite offering one of the highest
wage hikes in the industry and 11,988 gross hires skewed towards
lateral (75% of total gross adds). The company plans to hire 17,000-
20,000 gross heads in Q2 split evenly between freshers and laterals.
V a l u a t i o n
We have modestly raised our FY12 revenue/EPS estimates to
accommodate for the Q1 beat and continue to maintain our FY13
estimates. We now model FY12 revenue/EPS of | 44,671 crore/| 52.2vs. |
44,142crore/|51.9 earlier and expect TCS to report US$ and rupee
revenue growth of 21.3% CAGR and 19% CAGR over FY10-FY13E period.
Further we expect earnings to grow at 19.5% CAGR during the same
period. Finally, we continue to value TCS at | 1,320 i.e. at 22x FY13E EPS
estimate of | 60 and maintain our BUY rating
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B l o c k b u s t e r q u a r t e r …
Each quarter “Chandra – CEO of TCS” does and says what investors want
to hear. 7.5% US$ revenue growth was lead by strong volume growth of
7.4% and alleviates concerns of back-ended revenue growth in FY12.
Revenue growth was broad based with BFSI growing 5.8% QoQ,
manufacturing (8.9%), retail (11.3%) and telecom (14.3%). What is
encouraging is that the company signed 10 large deals (4-6 in North
America, 1 each in Europe and 2 in Emerging markets) and continues to
pursue 15 such additional deals which could help sustain growth
momentum. Notable concerns include utilisation excluding trainees
(83.2%) that continues to remain at elevated levels relative to the
management’s target of 82%-84%, soft pricing and new client additions,
and macro concerns which continue to be volatile. That said, we are
raising our FY12 revenue/EPS estimates to accommodate the Q1 beat but
maintain our FY13 EPS estimate and our |1320 price target.
ƒ Volume surge lead to comprehensive beat
TCS beat our and consensus estimates lead by a strong 7.4%
volume growth. Indian GAAP revenues grew 6.3% to |10,796 crore
vs. our/consensus estimate |10,686 crore/|10,691 crore while the
company earned |12.2 in diluted EPS ahead of our/consensus
estimate of |11.9/|11.6. Noticeably, EBITDA margins also were inline with our 28.2% estimate despite offering one of the highest
wage hikes in the industry and 11,988 gross hires skewed towards
lateral (75% of total gross adds). The company plans to hire 17,000-
20,000 gross heads in Q2 split evenly between freshers and laterals.
V a l u a t i o n
We have modestly raised our FY12 revenue/EPS estimates to
accommodate for the Q1 beat and continue to maintain our FY13
estimates. We now model FY12 revenue/EPS of | 44,671 crore/| 52.2vs. |
44,142crore/|51.9 earlier and expect TCS to report US$ and rupee
revenue growth of 21.3% CAGR and 19% CAGR over FY10-FY13E period.
Further we expect earnings to grow at 19.5% CAGR during the same
period. Finally, we continue to value TCS at | 1,320 i.e. at 22x FY13E EPS
estimate of | 60 and maintain our BUY rating
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