Tata Consultancy Services (TCS), India's leading software exporter, has reported a 7.70 percent rise in net profit (adjusted for special one-time bonus) for the quarter ended Mar. 31, 2015. The company has earned Rs. 57.73 billion, or Rs. 29.47 a share in the quarter, compared with Rs. 53.58 billion, or Rs. 27.27 a share for the same period last year. On sequential basis, net income rose 8.40 percent from Rs 53.28 million for the December quarter.
Including the impact of special one-time bonus, the company's net profit fell 30.70% on y-o-y basis to Rs 37.13 billion for the fourth quarter. On the sequential basis, the profit decreased 30.31% from Rs 53.28 billion for the December quarter.
Commenting on the results, Ashwin Mehta and Pinku Pappan, Nomura Financial Advisory and Securities, said, ''TCS's 4QFY15 quarter results were below expectations on revenue growth (1.6% q-q in CC terms vs. our est. of 2.5% q-q), but in line with expectations on margins and ahead on PAT, driven by higher-thananticipated forex gains. Three segments dragged on growth, according to the company; Telecom (down ~10% q-q); Energy and Utilities (down 8% q-q); and Diligenta (part of the Insurance segment). Excluding these segments, the company sounded positive on the deal pipeline and demand, but the flat headcount growth this quarter does not offer material comfort. We expect the stock to react negatively to the weaker-thananticipated growth on already toned-down expectations at the pre-results analyst briefing.''
Meanwhile, Sandip Agarwal and Omkar Hadkar, analyst, Edelweiss Securities, said, ''TCS Q4FY15 revenue at USD 3,900 million (down 0.8% QoQ, up 1.6% in constant currency) was below Street's 0.3% growth estimate. Barring telecom, insurance and energy, all verticals grew QoQ in constant currency (CC). The commentary remained positive riding the robust deal pipeline, rising traction in digital technologies, optimistic outsourcing trends from Europe and increase in discretionary spending despite headwinds from telecom and energy verticals. Maintain 'Buy' with a revised target price of Rs 2,900.''
Ashish Chopra and Siddharth Vora, analyst, Motilal Oswal, said, ''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% (plus 3.2pp 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. Our target price of Rs 2,700 discounts FY17E EPS by 18x. Neutral.''
''TCS posted results that were broadly in-line with our estimates; slightly better on operating margins and in-line on PAT level (adjusting for one-time payout and higher forex gain). Strong client addition (9 key wins across verticals) and realization gain continued in 4Q from 3Q and management commentary on most verticals ex-energy, telecom and insurance was buoyant for FY16E. We remain sticky with our target valuation based on inherent scale advantage and execution capabilities, positive outlook of majority verticals, robust addition in client metrics providing growth visibility. Our estimates remain largely unchanged; maintain Buy with Target Price of Rs 3,100,'' said, Apurva Prasad, research analyst, Reliance Securities.
Sarabjit Kour Nangra, VP research, IT, Angel Broking, said, ''For FY2016, company expects to beat the Nasscom IT industry growth target of 12-14%. Client additions were strong, with USD 100M+ revenue band increasing by 4, in USD 50M+ revenue band by 3 and in USD 20M+ revenue band by 3. Gross employee addition, is expected to be around 16,000 and the EBIT margins are expected to come in the same range. We maintain our buy rating on the stock with target price of Rs 3,350, on back of valuations.''
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