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Q3 Results: India disappoints, but America cheers TCS – The Economic Times

India market for the country’s largest software exporter Tata Consultancy Services (TCS) dropped by almost 9% on a sequential basis, said company’s CEO and MD N Chandrasekaran after the company announced a better-than-expected third quarter profit. “Except for India market, every other market grew,” he said. The IT giant saw a 3.8% growth in international business in dollar terms; while volumes from international business grew by 2.9%. In fact, North America contributed 52.7% to the company’s revenue in the quarter ended December 31. “It was a quarter of very high performance in terms of cash flows. It was the best in recent times. We added customers across the board; and deal flow was good,” Chandrasekaran said. “Indications for the next fiscal year are looking good. We look into the future very confidently,” he said. Buoyed by this stronger-than-expected third quarter performance, TCS said it would be hiring 5,000 more people this fiscal year as against its initial target of 50,000. It was in October 2013, when the IT giant reported its September quarter results, that it had raised its hiring target by 5,000 to 50,000. “The increase in the hiring target was expected as they have already reached the previous target for the year,” said Bhavin Shah , CEO, Equirus Securities. “Demand outlook is strong, and TCS is expected to do better in FY15. So, that is probably why they have hiked the hiring target,” he said. Speaking on the stock, Basudeb Banerjee , analyst, Quant Broking , says, “given the brisk rise in tech stocks , the rate of upmove on TCS might get capped, but we can expect a more than 10% return in the next 12 months,” says. TCS today reported a profit after tax (PAT) of Rs 5,333 crore for the third quarter ended December 31. ET Now Poll had estimated the figure to be at Rs 5,124.50 crore. The company had reported at profit of Rs 4,633 crore in Q2. Dollar revenues were at $3,438 million for the quarter versus $3,337 million, up 3%. Sales for the third quarter came in at Rs 21,294 crore. Volumes growth at 1.8% came in as a big disappointment as the Street was expecting the figure to be at around 3%. In the previous quarter volumes growth was at 7%. This low figure is being seen on account of the seasonality factor, with lesser number of working days in the quarter. Operating margins came in at 29.8%. The realisations for the quarter were up 74 basis points. The stock hit an intra-day high of Rs 2,380.00 and a low of Rs 2,321.10. After rallying over 70 per cent in 2013, the IT major is putting up a strong show in 2014; having gained nearly 10 per cent so far in the year. From the stock market perspective, historically TCS has seen profit booking after the announcement of results and hence experts are advising traders to adopt a cautious stance. Investors who own the IT stock should hold on to it as the stock is likely to move higher following earnings upgrades over the next few quarters, say experts. In 2013, TCS made low at Rs 1,250 levels and a high at Rs 2,258. It closed the year 2013 with a 73 per cent gain. From that key moving average, TCS has been rallying smartly since the beginning of December 2013 and can be said to be in an uptrend. It has been forming higher top higher bottom on the daily chart, which is a sign of an uptrend as per Dow Theory. The company has shown consistent results in the last few quarters and has emerged as a market leader in terms of setting the trend for the entire IT sector.
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