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    TCS   INE467B01029

TATA CONSULTANCY SERVICES LTD.

(TCS)
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Tata Consultancy says demand in U.S. strong across segments

01/15/2013 | 04:45am EST

MUMBAI/BANGALORE (Reuters) - India's top software services provider Tata Consultancy Services Ltd (TCS) (>> Tata Consultancy Services Limited) said demand in the key U.S. market is strong across its business segments, with regional banks stepping up spending on technology.

MUMBAI/BANGALORE (Reuters) - India's top software services provider Tata Consultancy Services Ltd (TCS) (>> Tata Consultancy Services Limited) said demand in the key U.S. market is strong across its business segments, with regional banks stepping up spending on technology.

The Mumbai-based company said on Monday that profit jumped 23 percent in the quarter ended December, beating analysts' expectations. TCS also gave an upbeat growth outlook, sending its shares up the most in more than eight months and prompting analyst upgrades on the stock.

Economic uncertainty in the United States had fuelled investor worry that clients may keep their IT budgets tight and postpone decision-making on technology spending.

"The U.S. is still a growth market," Chief Financial Officer S Mahalingam told Reuters in an interview at his Mumbai office on Tuesday. "If it sneezes then we have got a big problem. (But) the demand is very good across all segments."

The United States accounts for about half of TCS' revenue, compared with more than 60 percent overall for India's $100 billion outsourcing industry.

Banks, insurers and other financial services clients usually account for more than a third of the revenue at companies such as TCS' rival Infosys Ltd (>> Infosys Ltd), where better-than-expected results on Friday and an increased revenue outlook powered a 20 percent rise in its shares over two sessions.

"(The) U.S. economy has regional banks as well, and they are starting to spend. So there is growth," Mahalingam said.

While Monday's results prompted analysts from HSBC and CLSA to increase their ratings on TCS stock, some analysts said volume growth was not especially impressive.

Volumes, or billable hours, rose 1.25 percent on a sequential basis, while revenue in dollar terms increased 3.3 percent over the September quarter.

"The key disappointment was soft volume growth of 1.25 percent quarter-on-quarter. However, we remain assured by management's optimistic outlook on FY14 growth," Nomura analysts wrote in a note to clients.

(Editing by Tony Munroe and Ryan Woo)

By Aradhana Aravindan and Harichandan Arakali

Stocks treated in this article : Infosys Ltd, Tata Consultancy Services Limited

© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
CF INDUSTRIES HOLDINGS, INC. 1.87% 60.02 Delayed Quote.52.21%
HSBC HOLDINGS PLC 1.34% 443.15 Delayed Quote.15.43%
INFOSYS LIMITED 0.96% 1711.65 Delayed Quote.35.00%
TATA CONSULTANCY SERVICES LTD. 1.36% 3584.5 Delayed Quote.23.53%
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Analyst Recommendations on TATA CONSULTANCY SERVICES LTD.
More recommendations
Financials
Sales 2022 1 900 B 25 191 M 25 191 M
Net income 2022 388 B 5 145 M 5 145 M
Net cash 2022 377 B 5 003 M 5 003 M
P/E ratio 2022 34,2x
Yield 2022 1,95%
Capitalization 13 259 B 176 B 176 B
EV / Sales 2022 6,78x
EV / Sales 2023 5,97x
Nbr of Employees 488 649
Free-Float 27,8%
Chart TATA CONSULTANCY SERVICES LTD.
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Tata Consultancy Services Ltd. Technical Analysis Chart | TCS | INE467B01029 | MarketScreener
Technical analysis trends TATA CONSULTANCY SERVICES LTD.
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 38
Last Close Price 3 584,50 INR
Average target price 4 001,34 INR
Spread / Average Target 11,6%
EPS Revisions
Managers and Directors
Rajesh Gopinathan CEO, MD & Non-Independent Executive Director
Samir Seksaria Chief Financial Officer
Natarajan Chandrasekaran Non-Executive Chairman
K. Ananth Krishnan Chief Technology Officer
N. Ganapathy Subramaniam COO & Non-Independent Executive Director
Sector and Competitors
1st jan.Capi. (M$)
TATA CONSULTANCY SERVICES LTD.23.53%173 555
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SNOWFLAKE INC.10.52%104 650
AUTOMATIC DATA PROCESSING, INC.28.76%97 845
INFOSYS LIMITED35.00%95 513