Buy Tata Consultancy Services: target of Rs 4600: Sharekhan

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Sharekhan's research report on Tata Consultancy Services

Q3FY2022 revenue growth beat our estimates but margins lagged expectations. Deal wins, client additions, fresher hiring and cash conversion stayed strong. Strong demand was led by (1) higher investments in building digital core, (2) technology and operation optimisation and (3) growth & transformation agenda. TCS is well-equipped to capture market opportunities. The company announced a buy-back of Rs. 18,000 crore at Rs. 4500/share, implying a premium of 16.7%. The quantum of the buyback is higher than its last three buyback programs.

Outlook

We continue to prefer TCS on account of its full-service business model, solid execution, a large talent pool, higher payouts to shareholders and a robust client base. Hence, we maintain a Buy with a revised PT of Rs. 4,600.

More Info

At 17:30 Tata Consultancy Services was quoting at Rs 3,897.65, up Rs 40.40, or 1.05 percent.

It has touched an intraday high of Rs 3,944.40 and an intraday low of Rs 3,857.25.

It was trading with volumes of 368,315 shares, compared to its thirty day average of 103,347 shares, an increase of 256.39 percent.

In the previous trading session, the share closed down 1.50 percent or Rs 58.55 at Rs 3,857.25.

The share touched its 52-week high Rs 3,990.00 and 52-week low Rs 2,701.00 on 08 October, 2021 and 24 February, 2021, respectively.

Currently, it is trading 2.31 percent below its 52-week high and 44.3 percent above its 52-week low.

Market capitalisation stands at Rs 1,441,760.76 crore.For all recommendations report, click here

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