Tata Consultancy Services Ltd. share price target

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.

TCS reported a stellar performance in Q2FY21 with a beat across the board vs. our forecast. Revenue grew by 4.8% in CC and EBIT margin saw a whopping improvement of 260bps QoQ to 26.2% (an 8 quarter high). EPS of Rs22.5 grew by 20.3%/4.9% QoQ/YoY. In Q2, TCS has secured deals with TCV of US$8.6 bn (including Phoenix Standard Life deal of US$2.5 bn) vs. US$6.4 bn YoY. TCS believes that the uptick in tech spend is structural and the sector is right now witnessing the start of the first phase of a multi-year technology transformation cycle. TCS has announced a share buyback (through tender offer route) of Rs160 bn at...

We recommend a BUY on TCS Ltd with a Target Price of Rs 2750, an upside of ~5% from CMP of Rs. 2611 and Stop Loss Rs 2500.

We upgrade TCS to Buy from Hold with a revised PT of Rs. 2,600, given strong earnings growth potential over FY2021-23E Company best-placed to leverage next transformation wave given early investments on tech spend areas, strong delivery model, client proximity and status as preferred digital partner of large enterprises....

While BFSI vertical revenues of Indian IT players contracted in Q1FY21, we expect a swift recovery to pre-Covid growth levels through FY21 on the back of (1) receding supply challenges and (2) steady technology budgets at large US banks.