Fundamental Result Update

TCS - Q2FY18 Result Update



Strong Volume growth of 3.2% QoQ and increase in earnings by 8.6% QoQ

On a year on year basis, TCS grew 7.1% in constant currency, 8.3% in USD terms and 4.3% in INR, representing an acceleration over the last quarter. On a sequential basis, 3.2% volume growth translated into 3.2% revenue growth in both USD as well as INR terms and revenue growth was accompanied by good profitability, staged impressive margin recovery only partially aided by currency. Operating margin at 25.1% vs 23.4% QoQ, and the net margin at 21.15% vs 20.11% QoQ.

Outlook: 

Q2 was a strong quarter, marked by robust volumes and an uptrend in our revenue trajectory and an impressive margin recovery. With the exception of BFSI and retail, all verticals grew upwards of 9.5% yoy and management believe they have bottomed out in Retail and expect a good growth in the quarters ahead. With all the developments and improvement in margins, we value the stock at P/E of 17x FY19E EPS of Rs 156 and arrived at target price of Rs 2652 with a HOLD rating on the stock. 

 


Tags: FundamentalResult Update TCS


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