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* TCS’ (TCS IN) stock rose 1.1% in yesterday’s trade compared with 0.2% fall for the Sensex.
* TCS’ 1QFY20 revenue rose 2.3% QoQ in CC terms (1.6% in USD terms), while EBIT margin declined 94 bps QoQ owing to INR appreciation and wage hike.
* From a vertical perspective, BFSI (+1.3% QoQ in USD) and Retail (1%) grew at a subdued pace, while COMM (+3.1%), MFG (+3.7%), TECH (+4%) and Life Sciences & Healthcare (+4.3%) saw healthy growth.
* The IT major won US$5.7bn in TCV in 1QFY20, up >16% YoY, implying a book-to-bill ratio of 1.04x (0.97x in 4QFY19).
* Digital revenue accounted for 32.2% of TCS’ revenue in 1QFY20 (31% in 4QFY19), up 5.6% QoQ in USD terms.
* We expect the IT major to clock double digit growth in FY20E.
* We have a BUY rating on TCS with a TP of Rs2,350.
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