Buy Tata Consultancy Services; target of Rs 3882: Religare Retail Research

Religare Retail Research report on Tata Consultancy Services

TCS Q1FY24 revenue was in-line with our expectations. Rupee revenue came in at Rs 59,381cr, up by 0.4% QoQ and 12.6% YoY and revenue in USD was 7,226mn, up by 0.4% QoQ and 6.6% YoY. While growth in constant currency was flat QoQ and grew by 7% YoY. Amongst geographies, In terms of CC, the growth was mainly driven by the UK with 16.1% growth YoY followed by India, Latin America and Middle East with 14%, 13.5% and 15.2%, respectively. Amongst verticals, growth was led by Life Sciences and Healthcare which grew 10.1% followed by the Manufacturing vertical with 9.4% growth. Besides, other sectors like BFSI, Retail & Consumer and Technology and Media grew in single digit of 3%, 5.3%, 4.4 and 0.5%, respectively.

Outlook

Additionally, TCS would continue to maintain its leadership position, innovate products in newer technologies as per the demand and focus on managing cost and operating margins. On the financial front, we have estimated its revenue/EBIT to grow at 16.0/18.2% CAGR over FY23-25E and have maintained a Buy rating with a target price of Rs 3,882.

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