Home >Markets >Stock Markets >ICICI Securities positive on TCS stock amid above estimate Q3 results

Tata Consultancy Services (TCS) reported a healthy set of Q3FY21 results. Analysts believe the results of the IT major were above their estimates on all fronts. "The growth was across geographies and verticals. The QoQ growth in revenues was led by healthy demand in core transformation services and conversion from earlier deals. In terms of geographies (in CC terms), North America grew 3.3% QoQ, UK & Continental revenues increased 4.5% QoQ & 2.5% QoQ," says ICICI Securities.

The brokerage holds positive view on TCS share for long term investment. The company says, it will revise the estimates and target price for the stock soon. "The company aspires to register double-digit revenue growth in FY22E. This coupled with healthy deal pipeline, increase in deals like captive carve outs and robust margins keep us positive on the stock from a longer term perspective."

The share price of the biggest IT Services is up 38% in the last one year. The share closed at 3,123 on Friday.

In terms of verticals, revenue growth was led by Manufacturing (up 7.1% QoQ), BFSI (up 2% QoQ), Life Sciences and healthcare (up 5.2% QQ), Communication & Media (up 5.5% QoQ), Regional Markets & Others (up 7.3% QoQ) and Retail & CPG (up 3.1% QoQ). The attrition stood at 7.6% and the company added 15,721 associates taking the total to 469,261. The company deal pipeline continues to be healthy.

Constant currency revenues grew 4.1% QoQ, above our estimate of 3.0%. US$ revenues grew 5.1% QoQ to $5,702 million, above our estimate of 3.6% QoQ growth and $5,619 million estimate.

Rupee revenues grew 4.7% QoQ to 42,015 crore.

EBIT margins expanded 42 bps QoQ to 26.6%, above our estimates of 25.1%. This was mainly on account of better effort mix, improvement in utilisation, productivity, revenue growth partially offset by wage hikes.

The brokerage says, PAT of 8,701 crore was above their estimate of 8,578 crore estimate on the back better operating performance.

TCS has declared an interim dividend of 6 per share.

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