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Motilal Oswal
TCS (Neutral)
CMP: ₹2,476.20
Target: ₹2,700
Over the past five years, TCS has led the incremental revenues as well as operating profits not just domestically, but also in the global arena (compared to peers multiple times its size); and its market cap is second only to IBM. TCS’ 4QFY15 CC revenue growth of 1.6 per cent q-o-q was below our estimate of 2.7 per cent q-o-q, driven by disappointing volume growth of 1.42 per cent q-o-q (v/s our estimate of 2.8 per cent). The performance was below the company’s own expectation at the beginning of the quarter, as weakness in telecom and energy segments compounded Diligenta. Our estimates are largely unchanged post the results. While we estimate organic CC revenue growth of 14.5 per cent (plus 3.2 percentage points cross currency headwind). Lest weaker segments turn around in a couple of quarters, TCS’ outperformance to industry peers should continue to cool off in FY16.
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