tata consultancy services ltd - q2fy12 result update

8/3/2019 Tata Consultancy Services Ltd - Q2FY12 Result Update

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: [email protected]

ONG TERM INVESTMENT CALL

HOLD18 October 2011

Company Report | Q2FY12 Result Update

High Utilization Levels, Strong Volume Growth drive Q2

Performance

Tata Consultancy Services Ltd. (TCS) has delivered a good performance

for the second quarter. High utilization levels and increase in volume

growth have contributed to a good performance for the quarter.

Strong Volume Growth: TCS reported top-line and bottom-line numbers

which were slightly below with our estimates. Revenue at INR 116.33 bn

was up 25% and 7.7% on a YoY and a QoQ basis respectively. EBITDA

for the quarter stood at INR 33.84 bn, up 22% from the same quarter in

the previous year. TCS saw robust volume growth of 6.25% this quarter.

The international revenue grew by ~7.3%. Pricing however remained flat.

Offshore revenue stood at 50.9%, Onsite revenue stood at 45.2% while

Delivery Center Revenues (GDC / RDC) was 3.9% of total revenue.

Utilization excluding trainees was at an impressive 83.1%. If we include

trainees, utilization was still high at 76.4%, despite the company adding

to its bench strength. The company added 12,580 employees (net) in this

quarter, taking the total employee base to 214,770. Attrition stood at

12.5% in Q2FY12.

New deals in the quarter: TCS added 35 new clients in the quarter and

the number of active clients stands at 1010. TCS signed 10 new USD 100

mn clients this quarter, with 5 clients from North America, 4 fro

Europe/UK and 1 client from Latin America. From a domain perspective,

BFSI, Insurance and Telecom saw 2 new deals each and High-Tech,

Retail, Pharma and Energy saw 1 new deal each this quarter.

Performance across Industry Verticals & Geographies: BFSI segment

grew 24.4% Retail & Distribution grew 39.3% while Manufacturing grew

32.1% on a sequential YoY basis. Apart from the Indian and LatinAmerican markets all other geographies grew well this quarter. North

America and Continental Europe grew by 24.5% and 38.5% respectively

on a YoY basis.

Deal Pipeline looking good: The deal pipeline for the next few quarters

looks good and the company has not witnessed any visible signs of

slowdown or cut back in spending budgets from their clients in either

North America or Europe. The deal signings are on track despite the

uncertainty in the macro environment. The company continues to

maintain a positive outlook in the BFSI space which contributed to 43.5%

of the revenue for the quarter.

Industry IT / ITES

CMP (INR) 1120Target (INR) 1200

Upside / Downside 7.1%

52 week High / Low (INR) 1247/902.9

Market Cap (INR bn) 220.872

3M Avg. Daily Volumes 2296.73

P / E (FY12 E) 21.3x

Shareholding Pattern (%)

Promoters

74%

FIIs

13%

DIIs

8%

Others

5%

1 Year Stock Chart

40

50

60

70

80

90

100

110

120

130

140

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

TCS Nifty

Stock Performance

1 Month 3 Months 1 Year

TCS 11.7% 0.9% 15.0%

Nifty 2.4% -8.3% -16.9%

(INR in mn)

Particulars Actual Estimates

Total Income 116,334 117,356

EBITDA 33,841 35,207

Reported PAT 23,010 25,232* Source: Bloomberg, Unicon Research


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Growth by Domain

Particulars Q2 FY12 Q2 FY11 Y-o-Y Q1 FY12 Q-o-Q

IP Revenue

BFSI 43.5 44.0 -50 bps 43.3 20 bps

Telecom 10.7 12.8 -210 bps 11.7 -100 bps

Retail & Distribution 12.1 10.9 120 bps 11.6 50 bps

Manufacturing 7.8 7.4 40 bps 7.6 20 bps

Hi-Tech 5.9 4.6 130 bps 5.8 10 bps

Life Sciences & Healthcare 5.3 5.1 20 bps 5.2 10 bps

Travel & Hospitality 3.8 3.2 60 bps 3.7 10 bps

Energy & Utilities 4.3 4.3 0 bps 3.8 50 bps

Media & Entertainment 2.1 2.0 10 bps 2.2 -10 bps

Others 4.5 5.7 -120 bps 5.1 -60 bps

Total 100.0 100.0 100.0

Geographical Segment Revenue

Particulars (in %) Q2 FY12 Q2 FY11 Y-o-Y Q1 FY12 Q-o-Q

Americas

North America 53.4 53.7 -30 bps 52.9 50 bps

Latin America 3.0 3.9 -90 bps 3.1 -10 bps

Europe

UK 15.5 15.3 20 bps 15.3 20 bps

Continental Europe 10.1 9.1 100 bps 9.9 20 bpsIndia 8.3 9.9 -160 bps 9.3 -100 bps

Asia Pacific 7.5 6.2 130 bps 7.3 20 bps

MEA 2.2 1.9 30 bps 2.2 0 bps

Total 100 100 100


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Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20%

tata consultancy services ltd - q2fy12 result update

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