India's largest software exporter, Tata Consultancy Services (TCS) has earned profit of Rs 55.68 billion, representing a rise 45% while revenues went up 22.93% to Rs 221.11 billion for the first quarter of financial year 2014-15.
On quarter on quarter basis, it posted a rise of 3.9% in the net profit and 2.6% rise in the revenues.
Commenting on the results, Dipen Shah, head of private client group Research, Kotak Securities said, ''TCS results were above estimates. The highlight of the results was the 5.7% volume growth, which was better than expectations. The company has maintained that, growth in FY15 will be better than the growth rate in FY14, which is encouraging. Consistent high volume growth reflects effective demand generation initiatives and efficient execution for TCS. We remain positive on the future prospects of TCS.''
Bhuvnesh Singh, Barclays Research, said, ''TCS delivered a robust 5.5% USD revenue growth (vs. Barclays est. of 5%) in the June-14 quarter, led by 5.7% q/q volume growth. Management noted that US$191mn of incremental revenue was the highest across the previous 15 quarters and reiterated that FY15 will be a better year for the company in terms of revenue growth than FY14, led by a healthy deal pipeline & order book. Despite high utilization management expressed confidence that higher scale and continuing operational efficiencies will aid margins going ahead. We tweak our EPS estimates for FY15/16 and increase our price target to Rs 2730 as we retain our OW rating.''
Madhu Babu, HDFC securities Institutional Research, said, TCS continued its stellar performance with 1QFY15 results above our estimates. TCS currently trades at 38% premium to Infosys' valuation owing to its strong growth trajectory and margin discipline. We retain our EPS ests as upgrade in revenues is negated by reset in average exchange rate. Owing to continued bullish outlook and steady operating performance, we raise our P/E multiple to 20x FY16E vs. 19x earlier). Our TP is upped by 5.6% to Rs 2,500/sh. Retain Buy.''
Rumit Dugar, Religare institutional research, said, ''TCS reported a strong Q1FY15 with 5.5% QoQ US$ growth in revenues driven by 5.7% volume growth. While the stock is not cheap at 21.6x 1-yr forward PE, we think superior growth will support the premium. We upgrade our FY15/FY16 EPS estimates by 2%/2.3% to factor in the company’s outperformance during the quarter, and raise our TP to Rs 2,600 from Rs 2,450. Maintain Buy. ''
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