Buy Tata Consultancy Services; target of Rs 3900: Sharekhan

Sharekhan's research report on Tata Consultancy Services

Reported revenue stood at $7,421 million, down 0.6% q-o-q/ 1.1% y-o-y, missing our estimate of $7,587 million. EBIT margin improved ~30 bps q-o-q to 24.5%, beating our estimate of 24.3%. Order book TCV was strong at $9.4 billion, up 13.3% y-o-y with Book to bill at 1.3x. FY26 international revenue expected to be better than FY25 based on the order book, customer conversations and demand for multiple service lines.

Outlook

We maintain a Buy rating with a revised PT of Rs. 3,900 (25xFY27E EPS). At CMP, the stock trades at 23.6/21.7x FY25/26/27E EPS.