Prabhudas Lilladher's research report on Tata Consultancy Services
The quarterly performance exceeded our estimates, revenues and margins were up +0.8% CC QoQ and 70bps QoQ, respectively. The growth was broadbased across verticals and regions; international business was up 0.6% QoQ CC (vs declined ~0.5% QoQ LQ). However, the on-ground demand remains unchanged, the smaller deals and discretionary spends continue to see a pullback. Despite this slowdown, the company accelerated its AI investments strategies with senior leader hirings and powering AI into multiple offerings and service lines. With this AI theme, the company is further doubling-down on building Infrastructure with 1GW capacity AI Datacenter in India. We believe the investment is capturing the relevant theme around building AI Infrastructure and deepening its client relations with Hyperscalers and Tech Partners. The overall Capex seems to be heavy (USD 5-7bn); however, the concrete structure and vendor participation is yet to be decided.
Outlook
On the margins, we might see similar headcount trimming exercise carried out in H2, hence we are revising FY26E/FY27E/FY28E margins up by 40bps/30bps/30bps, while keeping the revenue growth unchanged. We assign 23x to Sep’27 EPS that translates a TP of 3,800. Maintain BUY.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
