Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing,...

We recommend BUY and assign 28x P/E multiple to its FY23E earnings of Rs. 127.6 per share which gives a TP of Rs. 3,550 per share, an upside of 14%.

Read through for peers: TCS Management expects tech spend to strengthen in CY21 with strong multi-year technology transformation opportunity. There is upside to growth & margin estimates on account of faster revenue...

Tata Consultancy Services (TCS) for the quarter ended Dec 2020 reported a consolidated revenue of Rs 42015 crore, a growth of 5% QoQ and 5% YoY. On USD terms the revenue for the quarter was USD 5702 million, a growth of 5% QoQ and 2% YoY. On constant currency (CC) basis the revenue was up 4.1% QoQ and 0.4% YoY. Growth in CC revenue on sequential basis is largely due to increase in revenue of all business verticals of the company. On YoY terms the CC revenue growth was led by BFSI, Life Sciences and Technology & services. The BFSI vertical which accounted for about 31.3% of the revenue...

Tata Consultancy Services (TCS) reported revenue growth of 4.1% QoQ CC in 3Q (v/s est. 2.3% QoQ CC). This is the best QoQ growth posted by the company since FY11 in a seasonally weak 3Q it was led by broad-based delivery across sectors and regions. Moreover, TCS improved its EBIT margin to 26.6% (+40bp QoQ; +100bp v/s our estimate) despite absorbing the full impact of a wage hike (160bps impact). Deal wins (ex-Postbank at ~USD0.5b) were USD6.8b, down QoQ on tough comps, but were up 13% from Q3 FY20. TCS reported OCF/PAT of 137% and FCF/PAT of 122%, boasting a strong...

Pricey but growth surprises possible near term TCS' 3QFY21 delivered a 9-year best, broad-based and better-than-expected 4.1% QoQ constant currency (CC) revenue growth in a seasonally weak quarter, significantly better than our estimate of 1.5% and that of consensus (~3%). Margin expansion of 40bps QoQ was a surprise (against expectation of a decline) after absorbing a 160bps hit from salary hike. YoY CC revenue growth turned positive one quarter ahead of guidance. TCS indicated double-digit growth for FY22, something that was already priced in. The question is whether it can deliver mid-teen or higher growth. A significant shift to cloud, faster conversion to revenue of deals won and market share...

Our target price of Rs 3,435 is based on 28x Dec-22E EPS (27x earlier) with EPS CAGR at 19% over FY21-23E. Tata Consultancy Services: We maintain ADD on TCS, following a back-to-back stellar performance and positive commentary. Key positives included (1) broad-based (verticals & services) growth outperformance (strongest 3Q in nine years) supported by better conversions, (2) robust deal wins with TCV at USD 6.8bn (ex-PBS Deutsche deal), 9MFY21 TCV higher by 23% and strong bookings/ramp-up expected in 4Q, (3) margin outperformance supported by operating leverage & efficiencies. Management provided double-digit outlook for FY22/CY21 (we have factored in 14.8% for FY22E) and sustainability of momentum for 3-5 years secular cycle of cloud adoption. Strong outlook for BFSI vertical (strongest-ever BFSI deal bookings), investments in hyperscalers units, improving supply-side metrics (stronger linkages with revenue growth and an uptick in contextual masters), and lowest-ever attrition were other highlights.

Double digit revenue growth expected in coming years We believe growing virtualisation of business is driving multi-year growth in IT spends. We believe IT companies will be key beneficiaries of this multiyear technology transformation phase. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, enterprises will see new age technologies developed around cloud and will lead to new business models & differentiated customer experiences. TCS' investments in building deep expertise on these platforms, in research & development spends and in...

TCS's QoQ dollar revenue growth of 5.1% beat street estimates (~3.1%) in a seasonally weak quarter.

Rising adoption of smartphones, high internet speed and social distancing (due to Covid-19) has changed consumer behaviour. Consumers now prefer to transact (buy a product) virtually over the smartphone via an app instead of physical transaction. This has led to virtualisation of business models. In addition, to keep business up and running in a work from home scenario, technology is gaining traction. As a result, new age technologies like cybersecurity (to protect business from work from home scenario), app development (to help customer transact virtually) and Cloud (to enable...

Our target price of Rs 3,070 is based on 27x Sep-22E EPS (24x earlier) with EPS CAGR at 16% over FY21-23E. We maintain ADD on TCS, following a stellar 2Q performance and a strong commentary. Key positives included the following: (1) strong deal wins (including Phoenix), supported by market share gains, vendor consolidation with a high number of small and mid-sized deals enabling faster transition) and a balanced deal pipeline; (2) broad-based growth across core verticals (BFSI, Retail & CPG rebound) and core geographies (UK to be volatile); (3) resumption of hiring momentum with 12,000 fresher on-boarding planned in 3Q (7,000 in 1Q) and wage increase, (4) operational resilience reflected in higher utilisation, lower attrition, lowest-ever DSO (including unbilled) leading to strong FCF generation-linked to better payout (Rs 160bn buyback announced).

Tata Consultancy Services Ltd (TCS) reported strong broad based growth in Q2 FY21, revenue stood at Rs. 40,135 crs up 3.0% YoY and 4.7% QoQ. Operating profit showed a growth of 18.5% YoY at Rs. 11,429 cr, operating margin grew by 260 bps at 26.2% than previous quarter aided by strong execution

TCS' growth of 7.2% USD outperformed street's estimates.