Accumulate TCS; target of Rs 4587: KR Choksey

KR Choksey's research report on TCS

TCS Q1FY25 revenue and earnings came in line with our expectations. Revenue grew to INR 6,26,130 Mn, up 5.4% YoY, primarily driven by double-digit growth in emerging markets and moderate growth in developed markets. EBIT jumped to INR 1,54,420 Mn, up 12.3% YoY, driven by lower business expense and employee expense; EBIT margins contracted by 150 bps YoY. PAT increased by 8.9% YoY to INR 1,21,050 Mn due to better operational performance partially offset by lower other income; PAT margins improved by 61 bps YoY.

Outlook

We increase our FY26E EPS to reflect expectation of growth across verticals going forward, robust pipeline, coupled with improvement in margins. We increase our Target Price (TP) to INR 4,587 and retain “ACCUMULATE” rating on the shares of TCS .