Buy Tata Consultancy Services; target of Rs 3650: Sharekhan

Sharekhan is bullish on Tata Consultancy Services has recommended buy rating on the stock with a target price of Rs 3650 in its research report dated January 09, 2023.

Broker Research

January 13, 2023 / 10:54 IST

26 Aug, 2025 12:21

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Sharekhan's research report on Tata Consultancy Services

Revenues grew by 2.2% q-o-q and 13.5% y-o-y in CC terms, ahead of our and street expectations of 1.5% q-o-q CC growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and U.K. EBIT margin improved by 50 bps to 24.5%,in line with street estimates led by currency benefits and better execution but offset by third party costs and return to normalcy costs. Management has guided for 25% exit margin for FY23. For the immediate near-term management commentary on geographies indicated varying levels of uncertainty due to the persisting macro-overhang. However, they have indicated greater confidence with respect to US and even UK while in case of Europe they are indicating caution for the medium term.

Outlook

At the current juncture, owing to multiple global headwinds outlook for FY24E looks uncertain, and recovery could be gradual in the coming quarters. However, we believe the structural growth story for Indian IT sector remains intact, and TCS being the flagbearer would emerge stronger. Notwithstanding near-term volatility, we remain constructive on TCS for long term and maintain Buy on TCS with an unchanged PT of Rs. 3,650. We advise investors to adopt a staggered approach to invest from long term perspective.

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