Buy stock of TCS; target of Rs 1370

"Established in 1968, Tata Consultancy Services (TCS), a member of the Tata Group is considered as the largest IT services firm in Asia based on its record of outstanding service, collaborative partnerships, innovation and corporate responsibility. TCS Ltd. is an Indian IT services, business solutions and outsourcing company headquartered in Mumbai, India. The service is delivered through its unique Global Network Delivery Model™ (GNDM), recognized as the benchmark of excellence in software development. TCS has over 2,26,751 of the world’s best-trained consultants in 42 countries. The company has generated consolidated revenues of US $8.2 billion for year ended March 31, 2011. It is the largest provider of information technology in Asia and second largest provider of business process outsourcing services in India."

"TCS Ltd has reported consolidated net profit of Rs 28949.30 million for the quarter ended on March 31, 2012 as against Rs 26229.50 million in the same quarter last year, an increase of 10.37%. It has reported net sales of Rs 132593.30 million for the quarter ended on March 31, 2012 as against Rs 101574.90 million in the same quarter last year, a rise of 30.54%. Total income grew by 28.43% to Rs.133579.50 million from Rs. 104010.70 million in the same quarter last year. During the quarter, it reported earnings of Rs 14.79 a share, registering 10.37% growth over prior year period. During the quarter, Net sales rose by 30.54% to Rs. 132593.30 million from Rs.101574.90 million in the same quarter last year and the Total Profit for the quarter ended March 2012 was Rs. 28949.30 million grew by 10.37% from Rs.26229.50 million compared to same quarter last year."

"At the current market price of Rs.1202.00, the stock is trading at 19.60 x FY13E and 16.91 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 61.31 and Rs. 71.08 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 15% over 2011 to 2014E respectively. _ On the basis of EV/EBITDA, the stock trades at 13.84 x for FY13E and 12.06 x for FY14E. Price to Book Value of the stock is expected to be at 5.66 x and 4.23 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1370 for Medium to Long term investment,” says Firstcall Research report.