Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tata Consultancy Services Ltd.
Expect strong Q2, but macro risk threatens
[ EXTRACT]
Higher BFSI exposure could impede growth in a slowdown
TCS has the highest exposure to the BFSI vertical (44% of revenue), which makes
it more vulnerable to the ongoing issues in the sector. We believe investors will
monitor developments in this vertical closely given its significance as a growth
driver following the recovery in 2010.
Revenue momentum and margin resilience have been better than expected
TCS has consistently beaten consensus estimates over the past year and expanded
its EBITDA margin in FY11 despite wage inflation and high attrition. While we
believe TCS will maintain its strong revenue growth in Q2 FY12, we remain
cautious on FY13 performance given the ongoing slowdown in the macroeconomic
environment.
Lowering estimates to reflect macroeconomic risks
We believe the current macro uncertainty will impact IT spending, leading to a
demand slowdown. We therefore lower our FY12/13/14 EPS estimates from
Rs53.50/63.51/76.04 to Rs53.40/60.48/70.84 to reflect this macro uncertainty.
Valuation: maintain Neutral; lower price target from Rs1,250 to Rs1,000
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool, assuming a WACC of
12.7% and a terminal growth rate of 3%. Our price target implies a one-year
forward PE multiple of 17.8x.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tata Consultancy Services Ltd.
Expect strong Q2, but macro risk threatens
[ EXTRACT]
Higher BFSI exposure could impede growth in a slowdown
TCS has the highest exposure to the BFSI vertical (44% of revenue), which makes
it more vulnerable to the ongoing issues in the sector. We believe investors will
monitor developments in this vertical closely given its significance as a growth
driver following the recovery in 2010.
Revenue momentum and margin resilience have been better than expected
TCS has consistently beaten consensus estimates over the past year and expanded
its EBITDA margin in FY11 despite wage inflation and high attrition. While we
believe TCS will maintain its strong revenue growth in Q2 FY12, we remain
cautious on FY13 performance given the ongoing slowdown in the macroeconomic
environment.
Lowering estimates to reflect macroeconomic risks
We believe the current macro uncertainty will impact IT spending, leading to a
demand slowdown. We therefore lower our FY12/13/14 EPS estimates from
Rs53.50/63.51/76.04 to Rs53.40/60.48/70.84 to reflect this macro uncertainty.
Valuation: maintain Neutral; lower price target from Rs1,250 to Rs1,000
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool, assuming a WACC of
12.7% and a terminal growth rate of 3%. Our price target implies a one-year
forward PE multiple of 17.8x.
No comments:
Post a Comment