Tata Consultancy Services Ltd. share price target

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...

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%.

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...

TCS reported a second consecutive stellar performance in Q3FY21 with a beat across the board vs. our forecast. Revenue grew by 4.1% in CC (best QoQ growth in Q3 in 9 years) and EBIT margin saw a improvement of 40bps QoQ to 26.6% (a 20 quarter high). EPS of Rs23.2 grew by +5.4%/+7.2% QoQ/YoY. In Q3FY21, TCS has secured deals with TCV of US$6.8 bn (excluding the Postbank Systems deal). TCS has maintained its positive outlook and is confident of achieving a double-digit YoY revenue growth in CC for FY22. We factor Q3FY21 beat and increase our FY21/22/23E revenue (US$) by...

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...

Tata Consultancy Services Ltd. (TCS) is a leading global IT services consulting and business solutions organization, headquartered in Mumbai. TCS founded in 1968 is a part of Tata Group, one of India's most respected business conglomerates and most respected brands. TCS is one of the largest Indian companies by market capitalization. It operates in 46 countries and is placed among the most valuable IT services brands worldwide. The company offers a range of IT services outsourcing and business solutions. They also offer IT infrastructure services, business process outsourcing services, engineering and industrial services, global consulting and asset...