Report

MOSL: TCS (Neutral) – 2QFY19-In-line-Macro not hostile just yet

TCS – 2QFY19: In-line; Macro not hostile just yet

(TCS IN, Mkt Cap USD100.3b, CMP INR1980, TP INR2000, 1% Upside, Neutral)

 

  • Back to double-digit revenue growth: In line with its recent commentary, TCS managed to return to double-digit YoY CC revenue growth (+11.5% YoY; our estimate: +11.9%) after 10 quarters. Dollar revenue increased by 3.2% QoQ (our estimate: +2.8%) to USD5.2b in 2QFY19. EBIT margin expanded 150bp QoQ to touch an 11-quarter high of 26.5% (our estimate: +26.1%), thanks to currency benefit of 120bp. PAT grew 22.6% YoY to INR79b (our estimate: INR78b).
  • Double-digit FY19 growth insight: TCS won deals with total contract value (TCV) of USD4.9b - the same as last quarter. It expects to grow in double-digits for the remainder of the year, the ask-rate for which is not demanding. To grow 10% YoY CC in FY19, the CQGR required in 2H is 0.3%. To grow 10%+ YoY CC in each quarter, flat revenue in 3Q and 1.9% QoQ CC growth in 4Q should suffice.
  • Demand trends healthy amid turbulent macro indicators: While talks of trade war and Brexit are potentially unnerving, TCS continues witnessing strong demand in the US, led mainly by BFSI and Retail. UK remains a 'complex' geography, but is currently seeing demand in BFSI, Retail and even Manufacturing. Continental Europe is being driven by multiple factors and investments in regions such as Germany and France are paying rich dividends.
Underlying
Tata Consultancy Services Limited

Tata Consultancy Services provide consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. Co.'s full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Cloud Services, Connected Marketing Solutions, Consulting, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON -Small and Medium Businesses, IT Infrastructure Services, Mobility Products and Services and Platform Solutions.

Provider
Motilal Oswal
Motilal Oswal

​Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance. 

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

Other Reports on these Companies
Other Reports from Motilal Oswal

ResearchPool Subscriptions

Get the most out of your insights

Get in touch