Tata Consultancy Services Ltd. share price target

alluded at continuing of growth momentum in FY2020E, despite witnessing macro challenges in the environment. FY2019 was a strong broadbased growth year, driven by strong mega deal wins in FY2018. Stepping into FY2020E, management has stated at strong TCV wins in FY2019 ($22 billion), which give comfort on the growth trajectory. However, management has resented from giving any growth statement...

Deal TCV enhances revenue visibility for FY20E Banking & financial services continued to have momentum in Europe besides a few banks facing company specific issues. Sub-segments such as softness in capital markets can keep vertical growth in check. Commentary on demand in retail & CPG vertical was positive from a medium term perspective. The key positive was continued trajectory in order win TCV, growth of 5% QoQ at $6.2 billion ($21.9 billion in FY19). This implies book to bill ratio of 1.15x indicating better revenue visibility for FY20E. Hence,...

Sequentially TCS registered a 2% rise in consolidated sales to Rs 38010 crore for the quarter ended March 2019. OPM fell 50 basis points to 26.5% which saw OP stagnant at Rs 10074 crore. Margin was down 50 bps qoq on a reported basis, but remained largely in line, adjusting for a...

TCS delivered strong Mar'19 quarter performance with 2.4% QoQ CC growth, 25.1% EBIT margins and US$6.2bn worth deal wins. BFSI growth returned to double digit trajectory and marked its strongest performance in 11 quarters. Digital revenues at US$6.7bn run rate increased by 46% YoY. TCS remains our preferred pick amongst IT large-caps due to its (1) systematic and timely investment in digital capabilities, (2) growth visibility buoyed by robust...

TCS' growth and scale leadership in digital (USD 6.7bn annualized) are key differentiators. Continuity in strong deal wins, broad-based growth across verticals (esp. core) and geographies are driving double-digit growth. Margin/attrition differential vs. peerset reflects superior execution. Payout policy (80-100% of FCF), 90% FCF/PAT, ~4% FCF yield and 11/10% USD rev/EPS CAGR over FY19-21E support valuations (currently at 20x FY21E). We maintain BUY on TCS following an inline 4QFY19. Our TP is Rs 2,410 implying 24x FY21E EPS, with ~1% change in est. TCS is our top large cap IT pick.

13 April 2019 TCS ended FY19 with full-year constant currency (CC) revenue growth of 11.4% YoY, EBIT margin of 25.6% (+80bp YoY) and net income growth of 22.5% YoY. In FY19, TCS paid out 93% of its free cash flows to shareholders via dividends/buybacks. For 4QFY19, revenue in CC grew 12.7% YoY (in line), EBIT margin shrank 50bp QoQ to 25.1% (in line after adj. for 60bp one-off) and net income at INR81.3b grew 17.7% YoY a 3.6% beat due to INR3.4b forex gains. TCS signed USD6.2b worth of deals in total contract value (TCS) in 4Q, making it the strongest quarter in FY19 on that front.

View: Strong revenue growth outlook despite macro-economic concerns The management is confident of strong growth in FY20 despite macroeconomic challenges in the environment. The company signed TCV of USD 6.3bn during the quarter and TCV of USD 21.9bn for FY19 which gives us comfort for the growth trajectory in FY20. We expect a USD revenue growth of 9%/10% in USD terms for FY20/FY21, which factors in healthy growth in the BFSI vertical. The company maintained its aspirational margin band of 26%-28% despite visa rejection and talent shortage; we expect TCS to deliver margin towards lower end of its guidance. We...

expectations of 2.2%. EBIT margins, however, was 25.1%, down 50bps qoq vs. our expectation of 25.6%, but in line if adjusted for one-time charges toward electoral trust. Robust commentary driven by client optimism, evident from strong TCV signings of US$6.2bn up 5% qoq indicates continued business traction for TCS in FY20E. The...

While growth momentum remains intact for now, one needs to be cautious on the likelihood of the same sustaining through the course of CY19. Barring Automotives and Hi-tech, traction is sanguine in other segments of the business

Tata Consultancy Services (TCS) the largest IT services exporter in India has witnessed strong demand in Q3FY19 across segments. Strong traction was also seen in digital space, digital space reported strong growth of 53% for Q3 FY19 on YoY basis.