Accumulate Tata Consulting Services; target of Rs 4631: KR Choksey

KR Choksey recommended accumulate rating on Tata Consulting Services with a target price of Rs 4631 in its research report dated January 10 2025.

Broker Research

January 13, 2025 / 11:16 IST

Accumulate

26 Aug, 2025 12:21

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KR Choksey's research report on Tata Consulting Services

TCS’s Q3FY25 revenue and profits came in line with our estimates. Revenue grew to INR 639,730 Mn (+5.6% YoY/-0.4% QoQ), driven by strong performance in the Latin America, UK, and India region partially offset by weakness in North America region. EBIT came in at INR 156,570 Mn (+3.3% YoY / +1.2% QoQ), missing our estimates (-2.5%) due to higher-than-expected employee cost and cost of equipment and software licenses; EBIT margin contracted by 54bps YoY (+41bps QoQ) to 24.5%. PAT stood at INR 123,800 Mn (+12.0% YoY, +4.0% QoQ), in line with our projections (-0.3%) driven by higher than anticipated other income and strong operational performance. PAT margin stood at 19.5% (+113bps YoY / +85bps QoQ).

Outlook

We reaffirm our FY27E EPS of INR 171.5 and assign a P/E multiple of 27.0x, reflecting TCS’s robust deal pipeline, highlighted by a TCV of USD 10.2 Bn and strong momentum in AI, cloud and modernization projects. TCS is poised to achieve substantial revenue growth driven by recent deal wins and improving macro-economic conditions. Rolling over our valuation to FY27E, we increase our Target Price to INR 4,631 (earlier: INR 4,587) and retain “ACCUMULATE” rating.

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