Revenue during the quarter grew 1.3 percent QoQ to Rs 37,338 crore in the October-December quarter.
Analysts have largely termed the results to be in-line, but some highlighted the impact on higher sub-contracting as well as constant currency headwind.
The software firm reported 2.6 percent sequential growth in December quarter profit at Rs 8,105 crore with constant currency revenue growth of 1.8 percent quarter-on-quarter (QoQ), meeting analyst expectations.
The bottomline growth was driven by other income (up 59 percent QoQ) but limited by weak operational performance. The company had reported a profit at Rs 7,901 crore in the quarter-ended September 2018.
Revenue during the quarter grew 1.3 percent QoQ to Rs 37,338 crore in the October-December quarter.
Here is a gist of what brokerages are saying about the company’s Q3 show.
Brokerage: Credit Suisse | Rating: Neutral | Target: Rs 1,775
The global research firm called the revenue to be in-line, while margins were a miss. Further, it highlighted that macro concerns do remain, but revenue trends remain solid for now.
Lack of skilled personnel and visa challenges pose some issues.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 2,260
The global research firm observed that the margin fell because of increased investment with respect to employee costs or subcontractors.
The company is on track to achieve constant currency revenue growth of over 11 percent year-on-year in FY19. It sees downside risk to margin given dismal performance in Q3.
Brokerage: Jefferies | Rating: Buy | Target: Cut to Rs 2,230 from Rs 2,300
Jefferies said that Q3 earnings missed on stronger constant currency headwind & higher sub-contracting. The management has maintained positive outlook, including for BFSI, retail and North America.
It believes that the company is best placed to deliver double-digit rev growth over FY19-21e among Tier-I IT companies.
Brokerage: Deutsche Bank | Rating: Hold | Target: Rs 1,740
Deutsche Bank said that the revenue momentum has been maintained, while acceleration was seen in BFSI Vertical & North America. Digital revenue growth at 53% YoY continues to accelerate, it added. Among geographies, it observed that UK & Europe have maintained strong growth rates at 25% & 17.6%.
Brokerage: Citi | Rating: Sell | Target: Cut to Rs 1,785
Citi said that concern on profitable growth for company/sector remains, it said. Infosys’ earnings is the next key sector event. Overall, it is maintaining cautious stance on the sector.
Brokerage: BNP Paribas | Rating: Buy | Target: Rs 2,140
BNP Paribas continues to see TCS as a play on digital-at-scale & automation.
Brokerage: CLSA | Rating: Buy | Target: Rs 2,460
CLSA said that stellar deal wins, solid execution suggest that the company is likely to retain leadership in FY21.
Further, it expects the company to fully exploit strong demand & gain share.
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