Tata Consultancy Services (TCS) hosted an analyst briefing with Rajesh Gopinathan, CFO. The management indicated that overall demand remains good and in line with its expectations, with 1HFY15 growing faster than 2HFY15. This is expected to be led by the likely return of discretionary spending, increased penetration in Europe and that the company has not seen any ramp downs or cancelations in projects in recent weeks.

4QFY14 has traditionally been a relatively soft quarter in terms of volume growth for IT companies and this year is expected to be no different, said Angel Broking. "We believe TCS is likely to deliver a 2.7-3% qoq volume growth in 4QFY2014 but this should not be any indication of slowdown in demand. Management indicated that along with expected seasonal softness in international revenues (vs. 3Q), domestic revenues are also likely to be weak in 4QFY2013 due to hit in IT spends ahead of the upcoming Central Government elections."

TCS expects EBIT margins to decline by ~40-50bp qoq largely due to ongoing investments to enter newer geographies and services lines. The company maintained that margins may stabilize in the 27%-28% band in the long term.

Angel Broking expects TCS to outperform industry on revenue growth due to its superior market reach and excellent execution capabilities. Management commentary on demand trends for FY2015 continued to be reassuring led by a favorable demand environment and market share gains.

''We expect TCS to grow its USD revenues at a CAGR of 16.5% over FY2013-15 and EPS at a CAGR of 25% during this period. TCS has executed well over the past many quarters and currently trades at 18.5x FY2015E EPS. We believe TCS' premium multiples are well deserved given consistency in performance and leadership in growth/profitability. We maintain our Buy rating on the stock,'' Angel Broking said. 

Shares of the company declined Rs 18.6, or 0.87%, to trade at Rs 2,122.55. The total volume of shares traded was 76,549 at the BSE (Tuesday).