Sharekhan's research report on Tata Consultancy Services
Robust deal win momentum with average deal wins of ~$8.9 bn over Q1FY23-Q1FY24 further aided by the recent large deals from JLR, Nest, and BSNL provides further resilience to the company’s revenue growth profile. TCS’s strong domain expertise, geographical presence, and ability to cross-sell make it well-positioned to grab market share during the challenging environment, as reflected from robust deal momentum. Revamp of the organisational structure undertaken by the new CEO is expected to alleviate concerns and aid in driving growth.
Outlook
We maintain Buy rating on TCS with revised PT of Rs. 4,200 (the increase in PT reflects rollover of valuation multiple to Sep 25E EPS), as we believe the company is well placed to grab cost takeout as well as digital transformation programs along with opportunities arising from vendor consolidation. At the CMP, the stock trades at 25.5x/22.8x its FY25/26E EPS.
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