Tata Consultancy Services Ltd. share price target

10 July 2018 9.1% YoY (est. of 8.3%), led by the comeback of the BFSI vertical (+4.1% YoY CC v/s flattish in 4QFY18). EBIT margin shrank 40bp QoQ to 25%, bettering our expectation of 24.7%. The realized exchange rate was 67.83 (est. PAT of INR73b was up 6.3% QoQ (est. of +0.3%) - the beat was led in part by a better operational performance and also by higher other income.

TCS' 1QFY19 result was marked by a strong margin management; reported USD revenue growth was broadly in-line. Management exuded confidence on recovery in the troubled US BFS vertical and indicated improved visibility on the medium-term outlook with a USD 4.9bn of pending order book in 1QFY19. This sets TCS well for a double-digit growth in FY19 though the high share of mega deals limits extrapolation over the longer term. We raise our FY19/FY20 EPS forecasts by 4% each on 1QFY19 margin beat + currency reset. The stock trades at 21X FY20F EPS, at 33% premium to INFO and 19% premium to its own 5-year median. Thus, while we recognize the recovery in growth trajectory and TCS' aptitude in...

TCS Q1FY19 results were better than expected on all fronts against our/street estimates. TCS reported 4.1%/1.6% qoq revenue growth in CC/USD terms against our expectation of 3.7%/2.7% growth. Strong growth in Europe and the UK led to higher-than-expected...

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 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 leveraged solutions....

TCS board has approved a proposal to buy back shares for an aggregate amount not exceeding | 16,000 crore. TCS will repurchase upto 7.6 crore of shares (1.99% of its equity) at | 2,100/share (~14% premium to CMP). The buyback along dividend payout is broadly in line with management intention of pay out ~80-100% of FCF to shareholders. It should also improve its return ratio by 400-500 bps as buyback + dividend payout should utilise (~50% of its cash & investments). We also upgrade our EPS estimates by 3-5% on account of revision in exchange rate (| 67 for...

The buyback should result in 2% accretion to EPS from a reduction in the share count. However, the cash reduction would result in a decline in other income, which is dominated by a yield of 8% on a pre-tax basis on the cash. Other income foregone would be to the tune of INR12-13b, which would result in an adverse EPS impact of ~2.5%, implying net EPS decline of ~50bp. However, given the reduction in networth, the RoE is likely to improve by 2pp....

13 June 2018 TCS has announced that its board will meet on 15 June 2018 to consider a proposal for buyback of shares. In February 2017, TCS had announced a buyback offer of INR160b at a price of INR2,850 per share (adjusted price of INR1,425), which was at a 16% premium to CMP. Also, this was The promoters had also tendered their shares the last time, but that was 2.5% of their holding (and not the prescribed maximum of 2.85%). As a result, their holding had increased to 73.57% from 73.31%. As a consequence, tendering accepted from non-promoter holders was 3.8%. However, the acceptance ratio for small retail investors was 100% due to the SEBIs mandate that companies reserve 15% of buyback for small shareholders with holdings worth less than INR200,000. This implies a lesser acceptance ratio for institutional holding closer to the 2.85% of equity bought back.

ICICI Securities Ltd | Retail Equity Research Tata Consultancy Services (TCS) made an announcement of bonus shares on April 19, 2018. The ratio was one bonus share for every one existing equity share i.e. 1:1. The record date for the same is June 2, 2018 while the ex-date for the same is today i.e. May 31, 2018. Consequently, TCS share price, as per yesterday's closing price, has dropped to | 1759/share from | 3518/share. Hence, now our target price also stands revised to | 1630/share...

29 May 2018 INFOs current discount to TCS in terms of forward P/E is 27%. INFO hit the bottom in 1HFY15, just before the new CEO took over the reins, when even after one year into the system in his second innings, Mr Narayan Murthy failed to bridge the growth gap with TCS. INFO has grown revenue at par with, if not better than TCS in the past three years. TCS may outgrow by a couple of percentage points this year, thanks to mega deals, but sustaining this might be challenging on a high base. However, INFOs EBITDA margin was 60bp better than TCS in FY18 a material swing there. If anything, FY18 was when INFO bottomed and reversed the trend, whereas it continued South for TCS. With the recent rise in absolute valuations, while the relative performance remains unchanged, we thought it worthwhile to revisit the implications in our reverse DCF model.