TCS Q2 Review - Growth Optimism Intact, But Near Term Hiccups Limit Upside: Motilal Oswal
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Motilal Oswal Report
Tata Consultancy Services Ltd. reported an in line revenue growth of 4% QoQ constant currency in Q2 FY22.
However, U.S. dollar revenue growth (2.9% QoQ) missed our estimate of 3.7% QoQ growth.
Ebit margin expanded by 10 basis point QoQ to 25.6%, but was lower than our estimate of 26.2%, on supply side challenges.
Profit after tax stood at Rs 97 billion, up 6.9% QoQ, aided by higher other income and stable effective tax rate.
TCS reported an operating cash flow/PAT of 103% and a free cash flow/PAT of 97% on good working capital management, indicating the ability to generate strong cash flow.
H1 FY22 U.S. dollar revenue/Ebit/PAT grew 19.1%/20.6%/28.4% YoY.
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