Tata Consultancy Services Ltd. (TCS)|Q2FY15 Result Update | Missed the street expectation; Risk to consensus estimates: Maintain HOLD | TP Rs.2,666:: IndiaNivesh

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Tata Consultancy Services Ltd (TCS) Q2FY15 performance was below our
expectations on all front. USD revenues grew by 6.4% Q/Q to $3,929 mn (INSPL
est: US$3,974mn). Excluding Mitsubishi Corp's ITF revenue of $100mn, the
comparable revenue growth was 3.7% Q/Q to $3829 mn. The organic revenue
growth is well below the street expectation range of 4.0-5.5% Q/Q. This was
primarily due to less than expected project ramp-up and negative cross currency
impact. Rupee revenue increased 7.7% Q/Q to Rs.238bn (INSPL est. Rs240bn)
driven by 6.1% Q/Q volume growth, ITF (+2.80% Q/Q), and currency impact
(+0.30% Q/Q), partially offset by 1.50% Q/Q decline in the pricing. EBIT margin
expanded ~55bps Q/Q to 26.8% due to currency (+12 bps), SG&A (+21 bps) and
depreciation (+70 bps). Net profit grew by 7.0% Q/Q to Rs54.1bn (INSPL est:
Rs56.2bn) with net margin of 22.7% (contracted 15bps Q/Q). During the quarter,
TCS reported the forex gain of Rs.1,644 mn (v/s Rs. 2,397 mn in Q1FY15).
Management expect 2HFY15 to be a much stronger relative to 2HFY14 and also
expect stable/positive client budget in FY16 on back of improved demand
environment, strong deal pipeline and huge traction in the key verticals.


LINK
http://www.indianivesh.in/Admin/Upload/635491344546260000_TCS_Q2FY15%20Result%20Update.pdf