Tata Consultancy Services Ltd. share price target

The spread of Covid-19 has led to lockdowns in many countries globally and could have adverse economic implications. In addition, the recent fall in crude prices could also have an adverse impact of fiscal health of oil producing countries. As a result, IT companies, which have considerable exposure to verticals such as oil, energy & utilities; banking & capital markets; manufacturing and travel & transport could see an adverse impact from the ongoing crisis. Companies like Wipro, Infosys in large cap and MindTree, NIIT Tech, Sonata software, Cyient, Accelya Solutions among...

The spread of Covid-19 has led to lockdowns in many countries globally and could have adverse economic implications. In addition, the recent fall in crude prices could also have an adverse impact of fiscal health of oil producing countries. As a result, IT companies, which have considerable exposure to verticals such as oil, energy & utilities; banking & capital markets; manufacturing and travel & transport could see an adverse impact from the ongoing crisis. Companies like Wipro, Infosys in large cap and MindTree, NIIT Tech, Sonata software, Cyient, Accelya Solutions among...

Muted Performance: TCS reported a muted Q3FY20 performance due to sluggish performance of BFSI and Retail verticals.

WBA is turning to managed services to transform its global IT function. WBA is set to launch a new managed services-based operating model for IT run and operational services, following a transitional period, TCS will provide managed...

TCS reported sluggish revenue growth of 1.3% QoQ and 6.8% YoY in constant currency terms for Q3FY20 at Rs. 39,854 crs. Client addition for TCS remained high during Q3FY20 which will help to generate sustainable growth over long term. TCV for Q3FY20 remained strong at $6bn.

Tata Consultancy Services (TCS) provides a comprehensive range of IT services globally. The company serves clients across diverse industries, including finance and banking, insurance, telecommunication,...

TCS's Q3FY20 results were in line with our expectation. Revenue grew by 1.3% QoQ in US$ vs. our forecast of 1% QoQ. Despite of muted revenue growth, TCS's EBIT margin saw a sharp improvement of 100bps QoQ to 25% (vs. our forecast of 24.6%). TCS continues to demonstrate strong EBIT margin management capabilities. EPS of 21.6, +0.9%/+0.2% was in-line with our forecast. TCS maintained the deal win momentum with TCV of ~US$6 bn which takes the 9MFY20 TCV to US$16 bn implying a ~22% YoY gowth....

Weakness in BFS, retail likely to continue in near term The company reported a below par performance on the revenue front mainly due to continued headwinds in banking financial services (tightening of spends in large banks in the US, UK) and retail (large retailers in US). The pressure is likely to persist in the near term in these areas. Further, the company discontinued giving breakup between digital and non-digital segments citing blurring lines between the two parts of businesses. On the other hand, momentum is expected to continue in insurance and life...

Tata Consultancy Services (TCS) profit rose 0.2% year-on-year to Rs 8,118 crore in the December quarter in line with estimates and a shade better than the Rs 8,042 crore reported in the second quarter. Tata Consultancy Services (TCS) for the quarter ended Dec 2019 reported a consolidated revenue of Rs 39854 crore, a steady growth of 2% compared to sequential previous quarter ended Sep 2019 revenue of Rs 38977 crore. Early single digit growth is driven largely by all verticals barring the core BFSI, which roughly accounts for about 40% of the reported revenue....

We continue to believe that TCS' trinity of growth'-scale-durability is challenged in the near to medium term. While TCS' supply-side metrics continue to be industry leading (margins, attrition, offshore leverage), risks on the demand side with macros (Brexit) and client specifics across core verticals remain. Valuations amply factor the positives with unfavourable risk-reward at 23.7/21.2x FY21/22E. We maintain NEUTRAL on TCS following an in-line rev/strong operational performance. Supply/op metrics are improving while demand drivers (BFSI) remain soft. Our TP of Rs 2,025 is at 20x Dec-21E EPS (unchanged EPS est).