Tata Consultancy Services Ltd. share price target

Tata Consultancy Services (TCS) reported revenue growth of 4.2% QoQ CC in 4QFY21 (v/s our estimate of 3.4%), delivering its third consecutive quarter of broad based (over 4% QoQ) growth. It marginally improved its EBIT margin to 26.8% (+20bp QoQ/+170bp YoY). The same was below our estimate (27.2%) on ramp up of large deals. Deal wins in 4QFY21 stood at USD9.2b, the highest in its history, with a book-to-bill ratio of 1.5x. A good 4Q helped it report sales (USD)/EBIT/PAT growth of 0.6%/10%/0.4% in FY21. Strong recovery from TCS, post the initial phases of the COVID-19 pandemic,...

expectations. Almost all sectors had strong sequential growth led by BFSI (+8.1 QoQ USD), Retail and CPG (+5% QoQ), Life Sciences and Healthcare (+4% QoQ) and Manufacturing (+5% QoQ). Both captive takeover deals won in Q3 in BFSI vertical (Postbank systems and Prudential Financial) are fully ramped up in Q4. FY21 revenue came at $22.17 Bn, +0.7% USD YoY. Deal TCV of $9.2 Bn was highest ever for a quarter, +3% YoY. FY21 order book size is robust at $31.6 Bn, +17.1% YoY. Management highlighted robust pipeline of smaller deals despite strong deal closure in Q4FY21. Smaller deals are also...

Tata Consultancy Services (TCS) for the quarter ended Mar 2021 reported a consolidated basis the revenue was up 4.2% QoQ and 5.9% YoY. Growth in CC revenue on sequential basis is largely due to growth in revenue of all business verticals of the company especially the BFSI. On YoY terms the CC revenue growth was led all verticals barring that of Retail & CPG and Communication & Media. The BFSI vertical which accounted for about 30% of the Q4FY21 revenue registered a growth of 7% QoQ and 13.3% YoY. Similarly the retail vertical that accounted for 15.5% of the revenue for the quarter was up by 4% QoQ but a fall of 0.9% YoY. The Life Sciences & Healthcare that...

We recommend BUY and assign 28x P/E multiple to its FY23E earnings of Rs. 127.4 per share which gives a TP of Rs. 3,560 per share, an upside of 10%.

TCS reported a third consecutive quarter of all-round performance in Q4FY21. Revenue grew by 4.2% QoQ in CC (3rd consecutive quarter of 4%+ QoQ growth), higher than our forecast of +3%. However, EBIT margin improvement of ~20bps QoQ to 26.8% was slightly lower than our forecast of 27.3%. In Q4FY21, TCS has secured deals with an all-time high TCV of US$9.2 bn taking the FY21 TCV to US$31.6 bn, +17% YoY. TCS has maintained its positive outlook and is confident of achieving a double-digit YoY revenue growth in CC for FY22. We fine-tune our forecast of revenue/EPS CAGR of 11.8%/14.4% over FY21-23. We...

We recommend BUY on the stock with a target price of Rs 3721.

TCS's Q4FY21 revenue growth of 4.2% QoQ CC was broadly in line with our optimistic estimates in a seasonally weak quarter.

We expect the IT sector revenue to grow at 14.4/10.8% (in USD terms) for FY22/23E with mid-tier IT growth to come in at 15.1/12.5%. We expect a margin expansion of ~55ps over FY21-23E (10/45 bps expansion in FY22/23E), following a 220bps expansion in FY21, leading to ~17% EPS CAGR over FY21-23E. We remain higher than consensus (HSIE EPS is ~6% ahead for FY23E) and expect the outperformance to continue. We increase multiples for Mindtree/Cyient/Zensar/Sonata and roll forward to Mar-23E for our coverage universe. Earnings for Wipro is revised downwards by 6.5/3.9% due to acquisition impact while we have increased estimates for Mindtree/Zensar/Sonata/Teamlease. We prefer INFY, HCLT, Persistent and Sonata We hosted our 5th Tech Investor forum with 20 corporates/experts participating in the event (virtual). The participants represented the full spectrum: (1) Large-cap IT services (TCS, Infosys, Wipro, Tech Mahindra, L&T; Infotech), (2) IT/ER&D; midcaps & small caps (Mphasis, L&T; Technology, Mindtree, Tata Elxsi, Happiest Minds, Zensar, Sonata, Intellect and Mastek), (3) Staffing (Teamlease) and (4) Tech industry experts (IBM, Capgemini, Salesforce, ISG, and Captive expert ANSR). The commentary across companies/experts indicated a continuation of multi-year industry tailwind (cloud acceleration) and optimism around the sector hitting and sustaining double-digit growth rate was validated

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,...

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...