ICICI Direct is bullish on Tata Consultancy Services recommended buy rating on the stock with a target price of Rs 3300 in its research report dated October 08, 2020.
ICICI Direct's research report on Tata Consultancy Services
Tata Consultancy Services (TCS) reported healthy Q2FY21 results that were above our estimates. The company reported 4.8% QoQ growth in dollar revenues (in constant currency terms), above our estimate of 2.6% QoQ growth. The growth was broad based across geographies and verticals. Margins increased 260 bps mainly due to an improvement in gross margins and lower SG&A expenses. The TCS board has approved a buyback of Rs 16,000 crore to buy back ~5.33 crore shares at Rs 3,000/share. The company has also declared an interim dividend of Rs 12/share (the record date is October 15, 2020 while payment date is November 3, 2020).
Hence, we now assign 28x P/E to the company’s FY23E EPS. Based on this, we arrive at a target price of Rs 3300/share and upgrade the stock from HOLD to BUY.
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