Buy Tata Consultancy Services: target of Rs 4400: Sharekhan

Sharekhan's research report on Tata Consultancy Services

Q2FY2022 headline revenue growth missed consensus estimates but margins remained in-line despite supply-side challenges. Deal wins, client additions, net staff additions and cash conversion stayed strong. Growth visibility remains strong led by enterprises higher spends on digital, strong traction for growth and transformation agenda and a rise in outsourcing.TCS is well-placed to capture growth and transformation opportunities. USD revenue and earnings would clock an 11%/14% CAGR over FY2022-24E; we continue to prefer TCS on account of its full-service business model, best-in class execution, higher payouts to shareholders and a robust client base.

Outlook

We maintain a Buy on TCS with a PT of Rs. 4,400, given strong revenue growth potential, robust deal wins and strong competencies across emerging technologies.