Re: {LONGTERMINVESTORS} TCS...Thread

[RAJESH DESAI]

Maintain 'Reduce' rating on TCS - TP Rs.1000 - Geojit BNP Paribas

USD revenue for 4QFY12 increased 2.4% qoq. However, EBIT margin declined 155 bps on adverse forex market conditions and higher SG&A (selling, general & administrative) expenses. Volume was up 3.3% qoq but overall realization declined 1%, possibly due to weak product mix. As far as FY13 is concerned, the management's comment is mildly positive. USD revenue is expected to grow 14 - 15% in FY13. However, margins would be flat excluding currency gains. This implies that any changes in EPS estimates by the street would be driven by gains/ loss from currency fluctuations. Company sees IT spending modestly picking up in FY13 and normal growth patterns would prevail. Planned wage hikes are also a positive signal. For the medium term, margins would continue to be under pressure, but a cyclical recovery and currency benefits may offset the margin pressure to some extent. Company has 42% exposure in banking & financial services industry (BFSI), where growth is flattish. This remains another concern.

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CA. Rajesh Desai

[Rajesh Desai]

Tata Consultancy Services (TCS), India’s largest software services exporter, has launched a software development facility in Gujarat's capital, Gandhinagar.  A special economic zone (SEZ), the campus will serve global customers across industry segments.

TCS Garima Park will have a 10,000-seat campus. Spread over 25.5 acres, Garima Park was inaugurated by Chief Minister Narendra Modi, along with Tata Group Chairman Cyrus P Mistry, and Chief Executive Officer & Managing Director N Chandrasekaran..  

 

Speaking at the inaugural ceremony, Modi said, "One feels joy when a child is born in one's family after marriage. But one feels immense joy when a child is born after many years of marriage.  Any development in IT in Gujarat gives us a similar joy.  There was a perception that there cannot be enough growth in IT without adequate knowledge of English language and Gujarat is behind other states because of this.  But this perception is changing with the state leading in IT applications especially e-governance."

 

Developed over 25.5 acres of land with a built-up area of 1.6 million square feet, TCS Garima Park is the latest addition to the company’s unique global network of software development and delivery centers. It features highly secure software development and delivery centers of multiple sizes to meet the needs of global clients.

 

"TCS has played a pioneering role to make Gujarat an attractive IT destination for global companies and also helped drive technology-led growth by investing in talented youth of the state and building long-term partnerships with state institutions.” He added: “We are delighted to launch our new world-class campus in Gandhinagar. This will help TCS further scale up its presence and drive the expansion of the IT industry in Gujarat," said N Chandrasekaran, Chief Executive Officer and Managing Director of TCS.

 

The park has been developed as a green campus and and it has applied for a Leadership in Energy and Environmental Design (LEED) gold rating.

 

The park will use natural light and ventilation extensively. It has a 250-seat amphitheatre and a 250-seat mutli-purpose hall. The campus has a learning center and iClass rooms (connected with other TCS learning hubs across the world), virtual presence conference rooms, meeting rooms and cafeterias.

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CA. Rajesh Desai