Tata Consultancy Services Ltd. share price target

3QFY25 broadly in line. International growth weaker than expected. 4Q TCV must be a bumper one for FY25 to match FY24

TCS’s Q3FY25 revenue and profits came in line with our estimates. Revenue grew to INR 639,730 Mn (+5.6% YoY/-0.4% QoQ), driven by strong performance in the Latin America, UK, and India region partially offset by weakness in North America region.

Reported revenue growth stood at $7,539 million, down 1.7% q-o-q/up 3.5% y-o-y missing our estimates of $7,591 million. Revenue growth in constant currency (CC) terms stood at 4.5% y-o-y. Revenue in rupee terms stood at Rs. 63,973 crore, down 0.4% q-o-q/up 5.6% y-o-y. Seasonality and softness in discretionary demand led to the decline in revenues

TCS reported revenue of USD7.5b in 3QFY25, down 1.7% QoQ in USD terms vs. our estimated decline of 0.3%. Growth was driven by India (up 8.2% QoQ/66.3% YoY) and MEA (up 7.7% QoQ), while North America was down 1.5% QoQ.

Tata Consultancy Services Limited (TCS) recorded revenue of Rs. 64,259 Crore, a growth of 7.6% YoY. The company recorded constant currency revenue growth of 5.5% in Q2 FY25.

TCS's Q2FY25 revenue aligned with our estimates, but earnings fell short of expectations. Revenue grew to INR 642,590 Mn (+7.7% YoY/+2.6%QoQ), driven by strong performance in the India, Asia-Pacific, and Europe regions.

With a strong deal pipeline and increasing demand for newer technologies, we believe TCS will demonstrate quicker recovery in H2FY25. Thus, we maintain our HOLD rating on the stock.

TCS’s operating performance missed expectations in Q2. Revenue grew 2.2% QoQ (1.1% CC) to USD7.67bn, in line with expectation.

1.1% CC QoQ revenue growth was in line. Margin pain of BSNL order, not visible thus far, showed up

Reported revenues stood at $7,670 million, up 0.9% q-o-q in constant currency (CC) terms, a tad below our estimate of 1% q-o-q in CC terms.

TCS reported revenue of USD7.6b in 2QFY25, up 2.2% QoQ in USD terms, beating our estimate of ~1.6%. Growth was driven by India (up 21.3% QoQ/93.2% YoY, aided by BSNL ramp-up)

We maintain BUY on TCS with revised PT of Rs. 5,230 (valued at 32x Sept 26E EPS). At CMP, the stock trades at 31.9/28.6/26.3x its FY25/26/27E EPS.