Accumulate Tata Consultancy Services; target of Rs 2236: KR Choksey

KR Choksey's research report on Tata Consultancy Services

TCS delivered solid constant currency (cc) revenue growth of 12.7% yoy (+2.4% qoq) in Q4 FY19 while the USD Revenue increased 8.5% yoy to USD 5,397 mn (+2.8% qoq) in line with our expectations. In Rupee terms, top line increased 1.8% qoq to INR 38,010 Cr. (+18.5% yoy). Operating margin of 25.1% in Q4 FY19 was down 52 bps qoq (down 31 bps yoy) impacted by slightly higher direct cost as % of revenue.

Outlook
We apply a P/E multiple of 24.3x to the FY20 estimated EPS of INR 92 to arrive at a target price of INR 2236 per share, an upside of 5.8% over last close. Accordingly, we assign an “ACCUMULATE” rating to the stock.

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