TCS announces excellent first quarter results post Market Closing…It closed at Rs 433 but should open firm on Monday

TCS closed at Rs 433 today…It should open firm on Monday 

This evening it has announced an excellent First Quarter FY 10,despite pressure on billing rates

On Revenues of Rs 7207 crs,the PAT is Rs 1534 crs,up 15% qoq and 19% yoy.The EPS is Rs 7.83…This gives a Market Multiple of less than 14…Infosys is 18+…so expect TCS to firm up towards Rs 500  

“We have delivered Rupee Growth and Dollar Growth” says N Chandrasekaran,COO,TCS

TCS has contracted 8 Large Deals in Q 1 across several Business Verticals…..5 from USA,2 from Europe and 1 in Asia Pacific….It is pursuing potentially big 20 more such contracts

It has 141642 Employees on it’s rolls as of date and the utilisation level is 79.2% excluding Trainees and 71.3% including Trainees

TCS seems to have been very proactive in meeting challenges in a tough and very competitive Business Environment 

Market will reward this Performance and take the price to 16-18 multiple range…that’s from Rs 433 currently towards Rs 500  

However TCS remains cautious on Prospects…They never give a Guidance,like Infosys does….and say it would be foolish to predict, with any certainty,volume growth ahead…They see stability in the main BFSI Segment but see some worries in Pharma,Telcom and other sectors

4 thoughts on “TCS announces excellent first quarter results post Market Closing…It closed at Rs 433 but should open firm on Monday

  1. Hey Ayush Thanks !…but I had also said Infosys will go down towards Rs 1500…but on the back of great TCS results,even Infosys has gone to a 20 Multiple of near Rs 2000…TCS has ofcourse,as expected, moved past 15% today towards 18 Multiple of Rs 500…This is the second highest intraday movement ever for TCS….These Valuations may hold as sound bytes from TCS indicate that the Indian IT Sector has not really been impacted as badly as percieved or expected by the deep recession in their Main markets in the Developed West

  2. Hi GAP
    The IT industry did get impacted due to the recession. The biggest cause of worry is that a lot of contracts with the clients have been re-negotiated with the clients at lower billing rates. To makes the matter worst these contracts have been sealed for 5 years! (smart move by developed west.).
    The new deals that had been bagged already have terribly low billing rates, which is dangerous as it forms a base for future contracts and hikes. I feel that this is just one off event. In future the pricing will be under immnense pressure and I feel project profitabilities going down by 30-35%. In case Rupee scales up to 42 levels, margins are bound to come down further. I expect 15% growth for this sector.

  3. Hi Kamal,

    I share your caution on the IT Sector…I’m comfortable with 12 to 15 Current Year Earning Multiples but we are witnessing 18 to 20 Multiples from yesterday…and you’re right about the impact on IT of our rupee getting more powerful,even though most IT companies hedge their export inflows

    Cheers

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