Accumulate Tata Consultancy Services; target of Rs 3370: Dolat Capital Market

Dolat Capital Market's research report on Tata Consultancy Services

FY21 was a defining year for the IT industry as it saw strong structural drivers getting in place and IT vendors all set to ride the wave of transformation. TCS itself has highlighted that it is well positioned to take on the G&T (Growth and Transformation) opportunities with its contextual knowledge of clients and strong R&D efforts driving innovation and new ideas. Even with its already highlighted Vision 25x25, it expects TCS hubs to act as innovation hubs and for team brain storming and only 75% resources at a-time to work on a WFA mode. As per the CEO; two key drivers for this multi-year transformation are 1) need to improve customer journey (front and back end) and organizations realizing the need to invest in Tech (no more deferment). With both drivers leading to cloud-led investments, TCS believes that Cloud will act as an ecosystem for further transformation with more cloud-led technologies being used over 3-5 years and thus believes that current cycle to drive growth sustenance/acceleration for multiple years.

Outlook

Given the correction post Q4, we change our recommendation to Accumulate with TP of Rs.3370 (unchanged) valued at 30x FY23E earnings