KR Choksey's research report on Tata Consultancy Services
Tata Consultancy Services (TCS) reported a mixed set of Q4FY24 numbers, with the top-line missing our estimates, while profits came in betterthan-expected. Revenue (+3.5% YoY) was driven by India (+37.9%),UK (+6.2%) and Manufacturing (+9.7%), but still missed our estimates by 1.0%. EBIT (+9.9% YoY) surpassed our estimates by 10.8% on stronger-than-expected execution and lower other expenses; EBIT margins expanded by 151 bps YoY. PAT jumped by 9.3% on lower other expenses and finance costs; PAT margins improved by 109 bps YoY. In Q4FY24, the IT Services attrition rate stood at 12.5%, slightly exceeding our base case estimate of 11.7% by 80 bps but remaining within the management's comfort range of 11% to 13%.
Outlook
We apply a 27.0x multiple on FY26E EPS to arrive at a raised Target Price of INR 4,194 per share, with an ACCUMULATE rating.
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