1. Low TCS attrition has emerged as key positive: Jefferies

Low TCS attrition has emerged as key positive: Jefferies

TCS delivered an in-line performance on revenue and margins. A constructive outlook on demand and potential immigration issues, waning growth headwinds, robust deal flow and reducing attrition were key positives.

By: | New Delhi | Published: January 14, 2017 6:06 AM
Major changes to top management could keep stock under pressure given difficult times. Major changes to top management could keep stock under pressure given difficult times.

TCS delivered an in-line performance on revenue and margins. A constructive outlook on demand and potential immigration issues, waning growth headwinds, robust deal flow and reducing attrition were key positives. However, major management changes with current CEO being elevated to group chairman and replaced by current CFO overshadowed the results and could keep the stock under pressure until growth/margins improve.

Major changes to top management could keep stock under pressure given difficult times. TCS’ current CEO was elevated to Tata Group chairman to be replaced by the current CFO. The strong credentials of the outgoing CEO – long history of industry leading performance, client connect and intense deal focus could increase investor nervousness especially given the structural changes in the industry and immigration noise.

Revenue in line, margins slightly ahead. Growth and margin performance for the quarter was stable and in line with estimates. Key positives was lowering attrition (11.3% – lowest in past three years), 9 large deal wins (5 in Europe) and a revival in growth across the banking/financials and retail verticals.

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