Analysts are expecting Q2FY16 PAT around Rs.6052 cr at 6.5% sequential growth (YOY)
and Q2EPS at 30.50 at 5% QOQ growth
CMP: 2592
Buy: 2580-2560
TGT: 2661-2685-2770 (T+5)
TGT:2840-2950-3150 (1-12M)
TGT: 3260-3450 (24M)
TSL<2540
Note: Consecutive closing below 2540 for any reason, TCS can fall up to 2510-2490-2455-2435 area, where it nay be again accumulated for investment purpose depending upon the Q2 result, guidance & other news flow.
Some key takeaways :
Market is expecting some what steady earnings from TCS in Q2 lagged by woes of Latin America & Japan market and in its insurance platform business (Dilgenta-UK subsidiary), but supported by some decent revenue growth for Q2 seasonal factor, recovery in client spending in US & EU.
Some cross currency headwinds effect may also be there in the Q2 result for depreciation of AUD (due to Chinese currency devaluation), Real (Brazil; commodity woes & political instability there). But EUR currency headwinds may be lower in Q2 due to relatively stable EUR after Q1 Greece drama.
Energy & telecom business might be tepid due to structural weakness but digital platform may give some support in Q2 and the subsequent quarters. Also, crude is bottoming out, we may see sequential higher spending by global oil giants and that may give some tailwinds for TCS in the coming quarters.
Market will keenly watch digital revenue growth and overall guidance & commentary for TCS apart from Q2 result.The stock under performed in the last few months against its peers Infy due to lower than expected earnings & guidance in Q1FY16.
Looking ahead, any major dips in TCS scrip due to result oriented volatility might be an good opportunity for investors to accumulate it for better operating leverages & margins, wider geographical reach of its business, diversified software service portfolios & strong executions.
Also, due to relatively depreciated INR & growing/stable global economics outlook (US/EU) and India's increasing "digital" thrust to improve its IT infrastructure, all major players might be major beneficiaries of that and TCS may also be one of them.
As par BG metric & present market parameters:
Current median valuation of TCS may be around : 2490 (FY:15)
Projected fair valuations might be around: 2770-3085-3470 (FY:16-18)
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | Low | High | Median | 200-DEMA | 10-DEMA |
| TCS | 101.34 | 258.51 | 23.5 | 2465.31 | 2504.38 | 2484.85 | 2552.09 | 2633.61 |
| TCS | 125.5 | 309.1 | 23.5 | 2743.49 | 2786.97 | 2765.23 | 2552.09 | 2633.61 |
| TCS | 155.95 | 369.25 | 23.5 | 3058.26 | 3106.72 | 3082.49 | 2552.09 | 2633.61 |
| TCS | 196.75 | 441.25 | 23.5 | 3435.10 | 3489.53 | 3462.32 | 2552.09 | 2633.61 |
Analytical Charts:
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