Tata Consultancy Services Ltd Q2FY11 Result Update

Tata Consultancy Services Ltd - Q2FY11 Result Update

Ø  Revenue at INR 92,864 mn; up 25% YoY & 13% sequentially.

Ø  EBITDA was at INR 27,762 mn, up 15% & 31%, QoQ and YoY respectively.

Ø  PAT was at INR 21,990 mn up 32%, YoY and 13%, QoQ.

Outlook & Valuation

Going forward, TCS expects clients to gradually increase their IT budgets. There is also a possibility that pricing could see a little bit of increase going forward. However, attrition remains a concern. With robust demand outlook we expect pricing to improve going forward especially in areas like enterprise solutions, cloud computing & consulting. However, there will be a concern about the uncertainty in global macro environment. With IT spending back and transformational deals making a comeback, TCS looks strong to deliver good performance in the coming quarters. At CMP of INR 986 the stock trades at 24x its FY11e EPS. We raise our price target from INR 1040 to INR 1148. Recommend Accumulate.

Thanks & Regards,

Unicon Wealth Research