Tata Consultancy Services
Cluster: Evergreen
Recommendation: Buy
Price target: Rs1,325
Current market price: Rs1,192
Orders galore
Key points
- Large orders bagged: Tata Consultancy Services (TCS) has bagged seven large outsourcing deals in the past six weeks, amounting to a combined value of over $500 million. The clients are from diverse industry domains and geographies.
- Boosting the Chinese operations: TCS has secured a $100-million order from the Bank of China, which is one of the largest outsourcing deals from China to an Indian vendor. Moreover, the induction of the global technology major Microsoft Corporation as a strategic investor with a 10% stake in its Chinese subsidiary, TCS China, also augurs well for the company's growth plans in China.
- Maintain Buy call: At the current market price the stock trades at 29.3x FY2007 and 23.3x FY2008 estimated earnings. We maintain our Buy call on the stock with price target of Rs1,325.
Television Eighteen India
Cluster: Emerging Star
Recommendation: Buy
Price target: Under review
Current market price: Rs895
TV18 enters stock broking business
Key points
- Web18, a subsidiary of TV18 India, has entered into a partnership with Ambit and Centurion Bank of Punjab (CBoP) to pursue stock broking business. In this venture Ambit and Web18 will hold a 40% stake each whereas CBoP will hold a 20% stake. It will leverage the partners' complementary strengths.
- This deal puts Web18 in a completely new line of business which allows it to put its niche Internet properties to good use. Given the market's thumbs-up to the deal (evident from the surge in CBoP price), the new TV18 stock is also expected to trade higher by Rs45-60.
- Earlier TV18 had acquired CRISIL Marketwire. Our estimates and the price target do not reflect the acquisition and the latest deal with Ambit and CBoP. After the listing of TV18 (new) and gaining clarity from the management we will be revising our estimates and price targets.
- We remain bullish on TV18 in view of the company's compelling properties and the ability of its management to monetise the same.