Monday, August 29, 2011

TCS - Fundamental Pick - Buy

The shares of the country's largest IT services firm have witnessed a sell-off recently due to fears of a possible double-dip recession in the US and Europe. However, these concerns seem to be overblown as the company has seen a healthy flow of deals from these regions.

In the previous quarter, the software giant clocked 10 new deals across geographies (led by US & Europe, followed by emerging markets) and registered a robust growth across verticals (hi-tech, telecom, retail, BFSI). The company management expects the demand environment and pricing to remain stable in the coming quarters. Given the volume growth, improvement in productivity and high utilisation levels, TCS is likely to outperform its peers in the industry for the rest of the year.

The management's positive growth outlook is also reflected in its hiring trend. After recruiting around 12,000 people in the first quarter of 2011-12, the company (largest private sector employer) is likely to meet its target of 60,000 people for the entire fiscal year. The company has also planned a capital expenditure of Rs 2,300 crore for 2011-12 to help increase its market share in Latin America, the Middle East and Asia.

Performance :

the stock has corrected sharply since the last 1 month and any recovery will depend on the signs of higher IT spend and US economy showing signs of buoyancy.

Time Span Price Change %Change
Today 1,006.50 57.35 6.04
Week 929.80 19.35 2.08
Month 1,146.05 -196.90 -17.18
Three Months 1,141.45 -192.30 -16.84
Six Months 1,111.20 -162.05 -14.58
One Year 874.10 75.05 8.58

Keep away from this stock. Any sharp declines to the levels of Rs.800 should be taken as an opportunity to add to ones portfolio and hold for 2-3 years time frame for a target price of Rs.1500/-

Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli

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