Sharekhan's research report on Tata Consultancy Services
TCS impressed with strong recovery in revenue growth and margin expansion; deal signings remained strong at $8.6 billion (including Phoenix deal of $2.5 billion). Management indicated that this is the start of the first phase of a multi-year technology transformation cycle given emergence of a new operating model, large adoption of cloud and acceleration of technology spends by customers. We expect TCS’ revenue and earnings to clock a 11%/13% CAGR over FY2021-23E; we prefer TCS on account of its full-service business model, early investments in digital capabilities and higher payout policy.
We maintain our Buy rating on TCS with a revised PT of Rs. 3,150, given its differentiated positioning and deep relationships with large global enterprises.
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