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Research Analysts

Nitin Kunte, CMT

[email protected]

Vinayak Parmar

[email protected]

Dharmesh Shah

[email protected]

Pabitro Mukherjee

[email protected]

Ninad Tamhanekar, CMT

[email protected]

Click here to know more…

Momentum Picks

New recommendations

Date Scrip I-Direct Code Buying Range Target Stoploss Upside (%)

5-Mar-18 TCS TCS 3010.00-3070.00 3410.00 2,850.00 12.0

Open recommendations

Date Scrip Avg Rec Price Target Stoploss CMP Return till date (%)

4-Jan-18 Titan 865.00 1048.00 768.00 806.00 -6.8

5-Jan-18 Zee TV 576.00 698.00 522.00 555.00 -3.6

9-Jan-18 Reliance Industries 935.00 1070.00 865.00 938.00 0.3

23-Jan-18 VST Industries 3105.00 3840.00 2770.00 3,160.00 1.8

29-Jan-18 Maruti 9610.00 10795.00 8645.00 8,824.00 -8.2

14-Feb-18 Tata Motors 375.00 422.00 347.00 360.00 -4.0

23-Feb-18 Merck 1485.00 1750.00 1370.00 1,525.00 2.7

Time Frame: 6 Months

Time Frame: 6 Months

Open Recommendations

Gladiator Stocks

March 5, 2018

Stock on the Move

Scrip Action

Mahindra CIE Buy

Duration: 3 Months

Click here to know more…

Ipca Labs Buy

Prism Cement Buy

NCC Buy

Duration: 1 month

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Tata Consultancy Services (TCS) – Stock gearing up to head towards uncharted territory…

• TCS is a leading Indian IT service company with the highest

employee base of 3.91 lakh. The share price of TCS has been

trading in a secular up trend forming a higher high - low on

the long term chart. After registering highs of | 2840 in

October 2014, the stock has undergone a secondary phase of

consolidation in a broader range of | 2850–2120. In January

2018, the stock recorded a breakout from the three-year long

consolidation, indicating resumption of primary up trend.

Recently, the stock has seen a throwback from a new life-

time high of | 3259, helping to work off the overbought

condition of weekly stochastic oscillator. The overall price

structure makes us believe the stock has confirmed the three

year long consolidation breakout by retesting it and is now

well positioned to accelerate the momentum, thereby

providing opportunity to create fresh long position from a

medium-term perspective

• The last leg of the up move was captured in a well defined

parallel rising channel drawn adjoining lows of November

2016 – July 2017 calculated from the high of February 2017.

This eventually aided the stock to conclude the three year

long consolidation, indicating a resumption of the up trend

• The stock has seen a sharp price up move and shallow

correction in terms of magnitude, compared to the price

action of three years long consolidation phase of 2014-17,

indicating a structural turnaround.

• We believe the recent throwback has approached its maturity

and is likely to resume its up trend as it is the confluence of:

a) Throwback arrested near 50% of its earlier six weeks rally

(| 2494–3259), placed at | 2876

b) Base formation near three week’s identical lows of | 2895

• In a nutshell, we believe the stock is likely to outperform the

broader market as it has set the stage to unfold the next leg

of rally towards | 3410 as it is the implicated breakout target

of the aforementioned rising channel

March 6, 2018 ICICI Securities Ltd. | Retail Equity Research 2

Strategy Buy

Stock Data

Price performance last five years

Technical Outlook Monthly Bar Chart

GLA

DIA

TO

R S

TO

CK

S

Source: Bloomberg, ICICI Direct.com Research

MACD in strong uptrend

diverging from its signal line

2325

2555

3259

2052

Buying range 3010-3070

Target 3410

Stoploss 2850

Potential upside 12%

Time Frame 6 Months

Market Capitalisation (| Cr.) 585820

Face Value (|) 1

52 Week High / Low 3259/2253

50/200 day EMA 2892/2619

3m Avg volume 241lacs

MF Holding(%) 1.27

FII Holding(%) 16.26

73

18

-5 -3

14

-100

0

100

2013 2014 2015 2016 2017

% C

hange

Year

Recommended on i-click to gain at 09:56 hrs on

March 05, 2018

2840

Consolidation breakout supported by strong volumes

Implicated target of Rising

channel breakout near 3410

With recent throwback stock has confirmed

the breakout of three years long consolidation,

auguring well for next leg of up move

2892

2000

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Tata Consultancy Services (TCS): Fundamental View

Tata Consultancy Services (TCS) is a leading Indian IT service company with the highest employee base of 3.91 lakh. Over the last

five years, the company’s dollar revenues grew at a CAGR of 11.6% to $17.6 billion. The company operates its services across

industry verticals led by BFSI that contributes 32.1% of revenues (in Q3FY18) followed by retail & CPG with 12.5% contribution. In

terms of geography, US is the major contributor with 54% and is followed by Europe with 27.6% contribution.

Leading Indian IT service company

TCS is a leading Indian IT service company with its revenues growing at a CAGR of 19.3% to | 117966 crore and PAT growing at

19.8% to | 26289 crore, over the last five years consistently outperforming the industry growth. In terms of EBIT margin, TCS

reported EBIT margin of 25.2% in Q3FY18 despite seasonal and macro headwinds. Its EBIT margin is higher than peers. Going

ahead, the management continues to target its EBIT margin to remain in the band of 26-28% in constant currency terms.

Digital business gaining momentum

Digital contribution continue to rise and contributed 22.1% to total revenues in Q3FY18 vs 16.8% in Q3FY17. It continues its digital

growth trajectory with yearly growth above 20% for four consecutive quarters and grew at a healthy 43.5% YoY in Q3FY18 in

reported terms. In the recent quarter, TCS signed its first US$50 million+ deal in the digital space indicative of the traction

company is seeing in digital deals. Capturing significant opportunities in cloud automation, analytics and IoT has led the company

achieve the annual run rate of ~US$ 3 billion in revenues from digital services in FY17. Digital run rate has already reached US$2.9

billion in the first nine months of the year and is expected to close FY18E with ~ US$4 billion revenues.

Recent deal wins bode well

Citing the demand environment, the TCS management indicated that the retail vertical is witnessing early signs of recovery and

expects it see double digit growth in FY19E. Small pockets like energy & utilities and travel are showing good growth. Although

BFSI is yet to see any recovery, insurance is going steady. During the last three to four months, TCS won many multi-year deals

and partnerships. It is expected it to add ~$2 billion to the company’s topline in FY18-20E. This would further lead to increased

revenue visibility for TCS.

Valuation & Outlook

From TCS’ portfolio perspective, the retail vertical has started showing signs of a revival while digital is keeping pace with an

annual run rate of ~$4 billion in FY18E. Furthermore, with early sign of demand recovery (announcement of large deal pipeline

remains good), we believe TCS would be key beneficiary once the demand environment improves given its market leading position

and adaptability with new age technologies such as Digital transformation, going ahead. Also, FY20E FCF yield of 4.3% and

management’s continuous commentary of maintaining a healthy payout ratio bodes well. Going ahead, we anticipate TCS’ dollar

revenues will grow 8-10% over the next two years despite near term macro headwind along with adaptability with new age

technologies such as Digital Transformation and Cloud computing could throw up huge opportunities enabling it to consistently

outperform the industry growth rate.


Stock Data

Key metrics

Financial Highlights

Source: Bloomberg, ICICI Direct.com Research

Particular Amount

Market Capitalization (| Crore) 607,784.6

Total Debt (FY17) (| Crore) 289.0

Cash and equivalents (| Crore) 45,663.0

EV (| Crore) 562,410.6

52 week H/L 3255 / 2255

Equity capital 197.0

Face value | 1

FY17 FY18E FY19E FY20E

P/E 23.3 23.4 21.5 19.2

EV / EBITDA 17.4 17.5 15.3 13.5

P/BV 6.9 6.9 5.8 4.9

RoNW (%) 29.8 29.5 27.1 25.7

RoCE (%) 38.0 37.9 34.9 33.2

| Crore FY17 FY18E FY19E FY20E

Net Sales 117,966 122,017 133,990 146,205

EBITDA 32,311 32,212 35,775 39,329

Net Profit 26,289 25,365 27,648 30,873

EPS (|) 133.4 132.5 144.4 161.3

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Follow up summary of Gladiator Stocks


Summary Performance - Recommendations till date

Total Recommendations 335 Open 9

Closed Recommendations 326 Yield on Positive recommendations 19.0%

Positive Recommendations 248 Yield on Negative recommendations -8.0%

Closed at cost 7

Strike Rate 78%

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Momentum Picks open recommendations

Date Stock Strategy Recommendation Price Target Stoploss Time Frame

14-Feb-18 NCC Buy 124.00-128.00 147.00 115.00 30 Days

20-Feb-18 Prism Cement Buy 120.00-123.00 142.00 114.00 30 Days

26-Feb-18 Ipca Labs Buy 670.00-682.00 775.00 621.00 30 Days

All the recommendations are in Cash segment

Back to Top

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Stock on the Move open recommendations

Back to Top

Date Scrip Name Strategy Recommendation Price Target Stoploss Time Frame

27-Feb-18 Mahindra CIE Automotive Buy 233-238 270.00 216.00 3 Month

All the recommendations are in Cash segment

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Price history of last three years of the short term recommendations


TCS Ltd

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Notes......


• It is recommended to enter in a staggered manner within the prescribed range provided in the report

• Once the recommendation is executed, it is advisable to keep strict stop loss as provided in the

report on closing basis

• The recommendations are valid for six months and in case we intend to carry forward the position, it

will be communicated through separate mail

Trading portfolio allocation

• It is recommended to spread out the trading corpus in a proportionate manner between the various

technical research products

• Please avoid allocating the entire trading corpus to a single stock or a single product segment

• Within each product segment it is advisable to allocate equal amount to each recommendation

• For example: The ‘Daily Calls’ product carries 3 to 4 intraday recommendations. It is advisable to

allocate equal amount to each recommendation

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Recommended product wise trading portfolio allocation


Duration

Momentum Picks-

Intraday

10% 30-50% 2-3 Stocks 1-2% Intraday

Momentum Picks-

Positional

25% 8-10% 6-8 Per Month 5-8% 1 Month

Stocks on the move 25% 12-15% 6-8 Per Month 10-12% 3 Months

Gladiator Stocks 35% 15-20% 20-30% 6 Months

Cash 5%

-

100%

Number of Calls Return Objective

Product Product wise

allocation

Allocations

Max allocation

In 1 Stock

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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]


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We /I, Dharmesh Shah, Nitin Kunte, Ninad Tamhanekar, Pabitro Mukherjee, Vinayak Parmar Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our

views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with

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general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant

percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any

companies that the analysts cover.

The information and opinions in this section have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not

be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on

reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a

particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in

certain other circumstances.

The research recommendations are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. These research recommendations

and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. ICICI Securities will not treat recipients as

customers by virtue of their receiving these recommendations. Nothing in this section constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.

The securities discussed and opinions expressed herein may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be

taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or

any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of these recommendations. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk

Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change

without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned herein during the period preceding twelve months from the date of these recommendations for services in respect of managing or co-managing

public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned herein in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its Analysts did not receive any compensation or other benefits from the

companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this

reports.

It is confirmed that Dharmesh Shah, Nitin Kunte, Ninad Tamhanekar, Pabitro Mukherjee and Vinayak Parmar, Research Analysts giving these recommendations have not received any compensation from the companies mentioned herein in the preceding

twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the company/companies mentioned herein as of the last day of the month preceding the publication of these research

recommendations.

Since Associates (ICICI group companies) of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned herein.

It is confirmed that Research Analysts do not serve as an officer, director or employee or advisory board member of the companies mentioned herein.

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This report or recommendations are not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or

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