TCS posted a 3.2% sequential growth in USD revenues to US$5,215mn v/s US$5,051mn in 1QFY2019. In rupee terms, revenues came in at `36,854cr V/s `34,261cr, up 7.6% QoQ. In Constant Currency (CC) terms, the company posted a 3.7% QoQ growth. On profitability front, EBIT margin showed an upside of ~148bps QoQ to 26.5%. Consequently, PAT came in at 7,901cr v/s `7,340cr expected, up of 7.6% QoQ.

Outlook and valuation: Management expects to maintain a double-digit yoy growth trajectory over the next two quarters and hopes to exit 4QFY2019 at a better run-rate than 4QY2018. We maintain our 9.7% USD revenue CAGR in
FY2018-20E. The stock is trading at 21.3x FY2020E EPS of `89.9.Valuations already discount a robust medium growth & favorable operating environment and valuations are higher than its P/E averages. However, given the good cash yield we recommend a Reduce.

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