Sharekhan's research report on Tata Consultancy Services
TCS reported revenue stood at $7,465 million, down 1% q-o-q/ up 1.4% y-o-y, missing our estimate of $7,501 million. EBIT margin fell ~30 bps q-o-q to 24.2%, missing our estimate of 24.8%. Order book TCV remained strong and broad-based at $12.2 billion, up 20% q-o-q/down 8% y-o-y. Book to bill stood at 1.6x. Management expects FY26 to be better than FY25 despite uncertainties and is targeting margins at 26-28%. We have cut our EPS estimates by ~5.4%/4.5% for FY26/FY27E, respectively, factoring the heightened uncertainty in the near term.
Outlook
We maintain BUY with a revised PT of Rs. 4,050 (valued at 25xFY27E EPS). At CMP, the stock trades at 25.4/23.7/21x FY25/26/27E EPS.
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